Page 33 - ENGLISH_FullText

of concentrated poverty with more children living with a single parent.
These children reside in poor neighbourhoods where there are no good role
models to learn from and to emulate. This demotivates them, perpetuates
dynamic poverty and affects their future likelihood of moving up the social
ladder.

Since the existing public housing programme implicitly encourages
divorce, especially among the poor, it is leading to the formation of a new
underclass inflicted with reduced future prospects.

5.3 Income Inequality

Rising income inequality is linked with the problem of low social
mobility among the less well-off families. It is made more difficult because
many born into lower and lower middle-income families have made too
little human capital investments because their parents are divorced.

Assortative mating further strengthens these effects as women
have become better educated over time. Better-educated men are now
more likely to marry better-educated women, and this is further worsening
the human capital investment opportunities of the young generation in
less well-educated families. They have fallen behind long before they could
receive tertiary education. So despite subsequent efforts to catch up, they
are still disadvantaged.

Their fate is in sharp contrast with the young generation from
upper and upper-middle income classes whose parents are much less
likely to be divorced and are able to make massive amounts of human
capital investments from early childhood.

This problem can be remedied if more individuals become better
educated. Investing in human capital would directly raise the incomes of
more individuals by making them more productive. It would also indirectly
increase the incomes of the less well educated in the population by
reducing their relative supply. The rising income inequality is therefore
a failure of society and government’s public housing policies which
discourage human and social capital investment in poor, single parent
households.

Hence, empirical evidence will be presented in the following
sub-section to attain the benefits of bona fide homeownership and
its concomitance with borrowing on home equity to invest in children
education.

5.4 Human and Soc i al Capital

Investment

This Report believes that extending homeownership is essential to
family investment in both human and social capital. Indeed, many studies
have shown families who are homeowners are more likely to invest in
childhood development and neighbourhood stability.

33