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Labour Supply and Home Ownership: the Impact of Borrowing Constraints on Female Activity in France


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  • Cédric Houdré


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    French housing policy has been seeking to promote home ownership. After a fairly robust rise until the early 1990s, first-time home-buying stalled for about ten years. Eighty-five percent of buyers take out loans, but households must meet two requirements in order to qualify: they need to provide a down payment and their loan cannot exceed 30% of income. By using infra-national fluctuations in real-estate prices and interest rates as sources of exogenous variation of debt, we can determine whether a household raises its labour supply when its income gearing nears the income ceiling. The data for a sample of couples in the 2004 Household Wealth Survey show that, up 25% of income, household income gearing does not influence female labour supply behaviour. When repayments cross that threshold, the female partner is 14% more likely to work. The combination of a weaker labour market and credit requirements can inhibit home ownership.

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    Bibliographic Info

    Article provided by Institut National de la Statistique et des Etudes Economiques in its journal Economie et Statistique.

    Volume (Year): 417-418 (2009)
    Issue (Month): (June)
    Pages: 153-172.

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    Handle: RePEc:crs:ecosta:es417-418h

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    Keywords: Female Labour Supply; Home Ownership; Credit Constraints;

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    1. Janice Shack-Marquez & William L. Wascher, 1986. "Some direct evidence on the importance of borrowing constraints to the labor force participation of married women," Working Paper Series / Economic Activity Section 63, Board of Governors of the Federal Reserve System (U.S.).
    2. Peter M. Zorn, 1989. "Mobility-Tenure Decisions and Financial Credit: Do Mortgage Qualification Requirements Constrain Homeownership?," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 17(1), pages 1-16.
    3. Douglas Staiger & James H. Stock, 1994. "Instrumental Variables Regression with Weak Instruments," NBER Technical Working Papers 0151, National Bureau of Economic Research, Inc.
    4. Wilde, Joachim, 2000. "Identification of multiple equation probit models with endogenous dummy regressors," Economics Letters, Elsevier, vol. 69(3), pages 309-312, December.
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