Housing wealth accumulation: The role of public housing *

•Estimates the effect of a spell in public renting on age at first-time homeownership.•Controls for self-selection into public housing using an IV strategy.•Introduces unobserved heterogeneity to account for any correlation between previous tenure and age at first-time homeownership.•Results on French data show that public housing speeded up transition to homeownership in the 1979–2006 period.

The public housing sector provides housing units at below-market rents, potentially allowing its tenants to save for a downpayment more quickly than they would have otherwise. In this paper, we analyze the effect of a spell in public housing on age at first-time homeownership using the French Housing Survey. We use a pseudo-panel approach that takes into account the specificities of the local housing market, to derive individual tenure transitions from multiple cross-sections data, for the period 1979–2006. Using an IV strategy to control for a potential selection into public housing, we jointly estimate public housing tenancy and duration before first-time homeownership, and take into account unobserved heterogeneity. Our results indicate that a spell in public housing increases the hazard to homeownership, supporting the idea that, in France in the study period, the public housing policy provided an important pathway to homeownership.