Home-ownership and the Labour Market: Evidence from Rental Housing Market Deregulation

Laamanen, Jani-Petri (2013): Home-ownership and the Labour Market: Evidence from Rental Housing Market Deregulation.

Abstract

Perhaps the most common finding relating housing to the labour market is that high home-ownership rates are associated with higher unemployment. In contrast, recent micro-evidence suggests that homeowners have relatively favourable labour market outcomes. We explore the effect of home-ownership on unemployment exploiting a rental housing market deregulation reform which created exogenous variation in home-ownership across regions, allowing us to avoid the endogeneity problem in earlier studies. While home-owners are less likely to experience unemployment, an increase in the home-ownership rate causes unemployment to rise. Externalities arising from consumption reductions and increased job competition may explain the conflicting evidence.

• Item Type: MPRA Paper
• Language: English
• Keywords: Home-ownership Unemployment
• Subjects: J - Labor and Demographic Economics > J6 - Mobility, Unemployment, Vacancies, and Immigrant Workers > J64 - Unemployment: Models, Duration, Incidence, and Job Search; R - Urban, Rural, Regional, Real Estate, and Transportation Economics > R3 - Real Estate Markets, Spatial Production Analysis, and Firm Location > R31 - Housing Supply and Markets

References

Abbring, J. H. and Heckman, J. J. (2007). Econometric Evaluation of Social Programs, Part III: Distributional Treatment Effects, Dynamic Treatment Effects, Dynamic Discrete Choice, and General Equilibrium Policy Evaluation. In: J.J. Heckman and E.E. Leamer (eds.), Handbook of Econometrics, Edition 1, Volume 6B. Elsevier.

Acemoglu, D., and J. Angrist (2000). How Large Are the Social Returns to Education: Evidence from Compulsory Schooling Laws. In NBER Macroeconomics Annual 2000, 9-74.

Ashraf, N., Karlan, D. and Yin, W. (2006). Tying Odysseus to the Mast: Evidence from a Commitment Savings Product in the Philippines. Quarterly Journal of Economics, 121(2), 635-672.

Battu, H., Ma, A. and Phimister, E. (2008). Housing Tenure, Job Mobility and Unemployment in the UK. The Economic Journal, 118, 311-328.

Blanchflower, D. G. and Oswald, A. (2013). Does High Home-Ownership Impair the Labor Market?NBER Working Paper No. 19079.

Blundell, R., Costa Dias, M., Meghir, C. and Van Reenen, J. (2004). Evaluating the Employment Impact of a Mandatory Job Search Program. Journal of the European Economic Association, 2(4), 569-606.

Costain, J. S. and Reiter, M. (2008). Business Cycles, Unemployment Insurance, and the Calibration of Matching Models. Journal of Economic Dynamics and Control, 32(4), 1120-1155.

Coulibaly, B. and Li, G. (2006). Do Homeowners Increase Consumption After the Last Mortgage Payment? An Alternative Test of the Permanent Income Hypothesis. Review of Economics and statistics, 88(1), 10-19.

Coulson, N. E. and Fisher, L. M. (2009). Housing Tenure and Labor Market Impacts: The Search Goes on. Journal of Urban Economics, 65, 252-64.

Crépon, B., Duflo, E., Gurgand, M., Rathelot, R. and Zamora, P. (2013). Do Labor Market Policies have Displacement Effects? Evidence from a Clustered Randomized Experiment. Quarterly Journal of Economics, 128(2), 531-580.

Di Tella, R. and MacCulloch, R. (2005). The Consequences of Labor Market Flexibility: Panel Evidence Based on Survey Data. European Economic Review, 49(5), pp. 1225-59.

Dynan, K. (2012). Is a Household Debt Overhang Holding Back Consumption? Brookings Papers on Economic Activity, 299-362.

Flatau, P., Forbes, M., Hendershott, P. H. and Wood, G. A. (2003). Homeownership and Unemployment: The Roles of Leverage and Public Housing.NBER Working Paper No. 10021.

Green, R. and Hendershott, P. (2001). Home-ownership and Unemployment in the US. Urban Studies, 38, 1501–1520.

Laibson, D. (1997). Golden Eggs and Hyperbolic Discounting. Quarterly Journal of Economics, 112(2), 443-478.

Mian, A. R., Rao, K. and Sufi, A. (2013). Household Balance Sheets, Consumption, and the Economic Slump. Quarterly Journal of Economics, forthcoming.

Mian, A. and Sufi, A. (2010). The Great Recession: Lessons from Microeconomic Data. American Economic Review, Papers & Proceedings , 100(2), 51-56.

Mian, A. R. and Sufi, A. (2012). What Explains High Unemployment? The Aggregate Demand Channel.NBER Working Paper No. 17830.

Moulton, B. R. (1986). Random Group Effects and the Precision of Regression Estimates. Journal of Econometrics, 32, 385-397.

Munch, J. R., Rosholm, M. and Svarer, M. (2006). Are Homeowners Really More Unemployed? The Economic Journal, 116, 991-1013.

Munch, J. R., Rosholm, M. and Svarer, M. (2008). Home Ownership, Job Duration, and Wages. Journal of Urban Economics, 63, 130-145.

Nickell, S. J. (1998). Unemployment: Questions and Some Answers. The Economic Journal, 108, 802-816.

Oswald, A. J. (1996). A Conjecture on the Explanation for High Unemployment in the Industrialized Nations: Part I. University of Warwick Working Paper No. 475.

Oswald, A. J. (1999). The Housing Market and Europe's Unemployment: A Non-technical Paper. www.andrewoswald.com.

Scanlon, K. and Whitehead, C. (2004). International Trends in Housing Tenure and Mortgage Finance. Council of Mortgage Lenders, London.

Stephens, M. Jr. (2008). The Consumption Response to Predictable Changes in Discretionary Income: Evidence from the Repayment of Vehicle Loans. Review of Economics and Statistics, 90(2), 241-252.

Van Leuvensteijn, M. and Koning, P. (2004). The Effects of Home-ownership on Labour Mobility in the Netherlands. Journal of Urban Economics, 55, 580-596.