IDEAS home Printed from https://ideas.repec.org/a/eee/jhouse/v55y2022ics1051137721000656.html
   My bibliography  Save this article

Regional housing wealth, relative housing wealth and labor market behavior

Author

Listed:
  • Jiang, Xiandeng
  • Zhao, Ningru
  • Pan, Zheng

Abstract

This paper introduces a relative measure of housing wealth to explain the difference in effects between self-reported and regional housing wealth. Our theoretical model predicts a negative (positive) relationship between individual housing wealth (regional housing wealth) and labor supply. By using China’s housing market boom, we find that self-reported housing wealth significantly reduces homeowners’ working hours while regional housing wealth does not significantly affect their labor supply. Moreover, the results show that the negative effect of housing wealth on labor supply is mainly driven by the change of relative housing wealth. Further, several robustness checks are performed to corroborate the validity of our identification strategies and to test the sensitivity on the effect of relative housing wealth.

Suggested Citation

  • Jiang, Xiandeng & Zhao, Ningru & Pan, Zheng, 2022. "Regional housing wealth, relative housing wealth and labor market behavior," Journal of Housing Economics, Elsevier, vol. 55(C).
    • Handle: RePEc:eee:jhouse:v:55:y:2022:i:c:s1051137721000656
    DOI: 10.1016/j.jhe.2021.101811
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1051137721000656
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.jhe.2021.101811?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Neumark, David & Postlewaite, Andrew, 1998. "Relative income concerns and the rise in married women's employment," Journal of Public Economics, Elsevier, vol. 70(1), pages 157-183, October.
    2. George A. Akerlof & Janet L. Yellen, 1990. "The Fair Wage-Effort Hypothesis and Unemployment," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 105(2), pages 255-283.
    3. Abel, Andrew B, 1990. "Asset Prices under Habit Formation and Catching Up with the Joneses," American Economic Review, American Economic Association, vol. 80(2), pages 38-42, May.
    4. Hanming Fang & Quanlin Gu & Wei Xiong & Li-An Zhou, 2016. "Demystifying the Chinese Housing Boom," NBER Macroeconomics Annual, University of Chicago Press, vol. 30(1), pages 105-166.
    5. Gao, Nan & Liang, Pinghan, 2019. "Home value misestimation and household behavior: Evidence from China," China Economic Review, Elsevier, vol. 55(C), pages 168-180.
    6. Hausman, Jerry A & Taylor, William E, 1981. "Panel Data and Unobservable Individual Effects," Econometrica, Econometric Society, vol. 49(6), pages 1377-1398, November.
    7. Enrico Moretti, 2013. "Real Wage Inequality," American Economic Journal: Applied Economics, American Economic Association, vol. 5(1), pages 65-103, January.
    8. Blanchflower, David G & Oswald, Andrew J, 1998. "What Makes an Entrepreneur?," Journal of Labor Economics, University of Chicago Press, vol. 16(1), pages 26-60, January.
    9. Campbell, John Y. & Cocco, Joao F., 2007. "How do house prices affect consumption? Evidence from micro data," Journal of Monetary Economics, Elsevier, vol. 54(3), pages 591-621, April.
    10. Jerry A. Hausman, 1996. "Valuation of New Goods under Perfect and Imperfect Competition," NBER Chapters, in: The Economics of New Goods, pages 207-248, National Bureau of Economic Research, Inc.
    11. Fu, Shihe & Liao, Yu & Zhang, Junfu, 2016. "The effect of housing wealth on labor force participation: Evidence from China," Journal of Housing Economics, Elsevier, vol. 33(C), pages 59-69.
    12. Richard Disney & John Gathergood, 2018. "House Prices, Wealth Effects and Labour Supply," Economica, London School of Economics and Political Science, vol. 85(339), pages 449-478, July.
    13. Goodman, John Jr. & Ittner, John B., 1992. "The accuracy of home owners' estimates of house value," Journal of Housing Economics, Elsevier, vol. 2(4), pages 339-357, December.
    14. Wenli Li & Rui Yao, 2007. "The Life‐Cycle Effects of House Price Changes," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 39(6), pages 1375-1409, September.
    15. David Cesarini & Erik Lindqvist & Matthew J. Notowidigdo & Robert Östling, 2017. "The Effect of Wealth on Individual and Household Labor Supply: Evidence from Swedish Lotteries," American Economic Review, American Economic Association, vol. 107(12), pages 3917-3946, December.
    16. Walter Fisher & F. Hof, 2008. "The quest for status and endogenous labor supply: the relative wealth framework," Journal of Economics, Springer, vol. 93(2), pages 109-144, March.
    17. Guido W. Imbens & Donald B. Rubin & Bruce I. Sacerdote, 2001. "Estimating the Effect of Unearned Income on Labor Earnings, Savings, and Consumption: Evidence from a Survey of Lottery Players," American Economic Review, American Economic Association, vol. 91(4), pages 778-794, September.
    18. Del Boca, Daniela & Lusardi, Annamaria, 2003. "Credit market constraints and labor market decisions," Labour Economics, Elsevier, vol. 10(6), pages 681-703, December.
    19. DiPasquale, Denise & Somerville, C. Tsuriel, 1995. "Do House Price Indices Based on Transacting Units Represent the Entire Stock? Evidence from the American Housing Survey," Journal of Housing Economics, Elsevier, vol. 4(3), pages 195-229, September.
    20. Murphy, Kevin J., 2000. "Performance standards in incentive contracts," Journal of Accounting and Economics, Elsevier, vol. 30(3), pages 245-278, December.
    21. John Y. Campbell & John Cochrane, 1999. "Force of Habit: A Consumption-Based Explanation of Aggregate Stock Market Behavior," Journal of Political Economy, University of Chicago Press, vol. 107(2), pages 205-251, April.
    22. Dunn, Thomas & Holtz-Eakin, Douglas, 2000. "Financial Capital, Human Capital, and the Transition to Self-Employment: Evidence from Intergenerational Links," Journal of Labor Economics, University of Chicago Press, vol. 18(2), pages 282-305, April.
    23. Richard Blundell & Luigi Pistaferri & Itay Saporta-Eksten, 2016. "Consumption Inequality and Family Labor Supply," American Economic Review, American Economic Association, vol. 106(2), pages 387-435, February.
    24. Wenli Li & Rui Yao, 2007. "The Life-Cycle Effects of House Price Changes," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 39(6), pages 1375-1409, September.
    25. Fortin, Nicole M, 1995. "Allocation Inflexibilities, Female Labor Supply, and Housing Assets Accumulation: Are Women Working to Pay the Mortgage?," Journal of Labor Economics, University of Chicago Press, vol. 13(3), pages 524-557, July.
    26. Christopher Worswick, 1999. "Credit Constraints and the Labour Supply of Immigrant Families in Canada," Canadian Journal of Economics, Canadian Economics Association, vol. 32(1), pages 152-170, February.
    27. McBride, Michael, 2001. "Relative-income effects on subjective well-being in the cross-section," Journal of Economic Behavior & Organization, Elsevier, vol. 45(3), pages 251-278, July.
    28. Murphy, Kevin J., 1999. "Executive compensation," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 38, pages 2485-2563, Elsevier.
    29. Anat Bracha & Uri Gneezy & George Loewenstein, 2015. "Relative Pay and Labor Supply," Journal of Labor Economics, University of Chicago Press, vol. 33(2), pages 297-315.
    30. Brian A. Jacob & Jens Ludwig, 2012. "The Effects of Housing Assistance on Labor Supply: Evidence from a Voucher Lottery," American Economic Review, American Economic Association, vol. 102(1), pages 272-304, February.
    31. Edward Glaeser & Wei Huang & Yueran Ma & Andrei Shleifer, 2017. "A Real Estate Boom with Chinese Characteristics," Journal of Economic Perspectives, American Economic Association, vol. 31(1), pages 93-116, Winter.
    32. repec:eee:labchp:v:3:y:1999:i:pb:p:2485-2563 is not listed on IDEAS
    33. Thorstein Veblen, 1899. "Mr. Cummings's Strictures on "The Theory of the Leisure Class"," Journal of Political Economy, University of Chicago Press, vol. 8, pages 106-106.
    34. Smith, Adam, 1759. "The Theory of Moral Sentiments," History of Economic Thought Books, McMaster University Archive for the History of Economic Thought, number smith1759.
    35. Li, Lixing & Wu, Xiaoyu, 2014. "Housing price and entrepreneurship in China," Journal of Comparative Economics, Elsevier, vol. 42(2), pages 436-449.
    36. Jeffrey R. Brown & Courtney C. Coile & Scott J. Weisbenner, 2010. "The Effect of Inheritance Receipt on Retirement," The Review of Economics and Statistics, MIT Press, vol. 92(2), pages 425-434, May.
    37. Manoj Atolia & Kislaya Prasad, 2011. "Relative Wealth Concerns and Entrepreneurship," Economica, London School of Economics and Political Science, vol. 78(310), pages 294-316, April.
    38. Harold L. Cole & George J. Mailath & Andrew Postlewaite, 1995. "Incorporating concern for relative wealth into economic models," Quarterly Review, Federal Reserve Bank of Minneapolis, vol. 19(Sum), pages 12-21.
    39. Evans, David S & Jovanovic, Boyan, 1989. "An Estimated Model of Entrepreneurial Choice under Liquidity Constraints," Journal of Political Economy, University of Chicago Press, vol. 97(4), pages 808-827, August.
    40. King, Robert G. & Plosser, Charles I. & Rebelo, Sergio T., 1988. "Production, growth and business cycles : II. New directions," Journal of Monetary Economics, Elsevier, vol. 21(2-3), pages 309-341.
    41. Summers, Lawrence H, 1988. "Relative Wages, Efficiency Wages, and Keynesian Unemployment," American Economic Review, American Economic Association, vol. 78(2), pages 383-388, May.
    42. Kydland, Finn E & Prescott, Edward C, 1982. "Time to Build and Aggregate Fluctuations," Econometrica, Econometric Society, vol. 50(6), pages 1345-1370, November.
    43. Kain, John F & Quigley, John Michael, 1972. "Housing Market Discrimination, Homeownership, and Savings Behavior," American Economic Review, American Economic Association, vol. 62(3), pages 263-277, June.
    44. Lingxiao Zhao & Gregory Burge, 2017. "Housing Wealth, Property Taxes, and Labor Supply among the Elderly," Journal of Labor Economics, University of Chicago Press, vol. 35(1), pages 227-263.
    45. George A. Akerlof, 1982. "Labor Contracts as Partial Gift Exchange," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 97(4), pages 543-569.
    46. Katherine Kiel & Jeffrey Zabel, 1999. "The Accuracy of Owner-Provided House Values: The 1978-1991 American Housing Survey," Working Papers 9906, College of the Holy Cross, Department of Economics.
    47. Veblen, Thorstein, 1899. "The Theory of the Leisure Class," History of Economic Thought Books, McMaster University Archive for the History of Economic Thought, number veblen1899.
    48. Olga Gorbachev, 2016. "Has the Increased Attachment of Women to the Labor Market Changed a Family's Ability to Smooth Income Shocks?," American Economic Review, American Economic Association, vol. 106(5), pages 247-251, May.
    49. King, Robert G. & Plosser, Charles I. & Rebelo, Sergio T., 1988. "Production, growth and business cycles : I. The basic neoclassical model," Journal of Monetary Economics, Elsevier, vol. 21(2-3), pages 195-232.
    50. Andrew Henley, 2004. "House Price Shocks, Windfall Gains and Hours of Work: British Evidence," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 66(4), pages 439-456, September.
    51. Evans, David S & Leighton, Linda S, 1989. "Some Empirical Aspects of Entrepreneurship," American Economic Review, American Economic Association, vol. 79(3), pages 519-535, June.
    52. Johnson, William R., 2014. "House prices and female labor force participation," Journal of Urban Economics, Elsevier, vol. 82(C), pages 1-11.
    53. Jacob Mincer, 1958. "Investment in Human Capital and Personal Income Distribution," Journal of Political Economy, University of Chicago Press, vol. 66, pages 281-281.
    54. Katherine A. Kiel & Jeffrey E. Zabel, 1999. "The Accuracy of Owner‐Provided House Values: The 1978–1991 American Housing Survey," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 27(2), pages 263-298, June.
    55. Orazio P. Attanasio & Luigi Pistaferri, 2016. "Consumption Inequality," Journal of Economic Perspectives, American Economic Association, vol. 30(2), pages 3-28, Spring.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Xiandeng Jiang & Zheng Pan & Ningru Zhao, 2023. "Relative Value vs Absolute Value: Housing Wealth and Labor Supply," The Journal of Real Estate Finance and Economics, Springer, vol. 66(1), pages 41-76, January.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Xiandeng Jiang & Zheng Pan & Ningru Zhao, 2023. "Relative Value vs Absolute Value: Housing Wealth and Labor Supply," The Journal of Real Estate Finance and Economics, Springer, vol. 66(1), pages 41-76, January.
    2. Fu, Shihe & Liao, Yu & Zhang, Junfu, 2016. "The effect of housing wealth on labor force participation: Evidence from China," Journal of Housing Economics, Elsevier, vol. 33(C), pages 59-69.
    3. Xuecun Zhao & Yanrong Liu, 2022. "Effects of housing demolition on labor supply: Evidence from China," Review of Development Economics, Wiley Blackwell, vol. 26(3), pages 1663-1692, August.
    4. Li, Han & Li, Jiangyi & Lu, Yi & Xie, Huihua, 2020. "Housing wealth and labor supply: Evidence from a regression discontinuity design," Journal of Public Economics, Elsevier, vol. 183(C).
    5. Mikhail Golosov & Michael Graber & Magne Mogstad & David Novgorodsky, 2021. "How Americans Respond to Idiosyncratic and Exogenous Changes in Household Wealth and Unearned Income," NBER Working Papers 29000, National Bureau of Economic Research, Inc.
    6. Benno Torgler & Sascha L. Schmidt & Bruno S. Frey, 2006. "Relative Income Position And Performance: An Empirical Panel Analysis," IEW - Working Papers 268, Institute for Empirical Research in Economics - University of Zurich.
    7. Fischer, Justina A. V. & Torgler, Benno, 2007. "Social Captial and Relative Income Concerns: Evidence from 26 Countries," Berkeley Olin Program in Law & Economics, Working Paper Series qt8sv0k59c, Berkeley Olin Program in Law & Economics.
    8. Benno Torgler & Justina A.V. Fischer, 2006. "Does Envy Destroy Social Fundamentals? The Impact of Relative Income Position on Social Capital," Working Papers 2006.38, Fondazione Eni Enrico Mattei.
    9. Dohmen, Thomas, 2014. "Behavioral labor economics: Advances and future directions," Labour Economics, Elsevier, vol. 30(C), pages 71-85.
    10. Fabio Maccheroni & Massimo Marinacci & Aldo Rustichini, 2012. "Social Decision Theory: Choosing within and between Groups," Review of Economic Studies, Oxford University Press, vol. 79(4), pages 1591-1636.
    11. Benno Torgler & Sascha L. Schmidt & Bruno S. Frey, 2008. "The Power of Positional Concerns," IEW - Working Papers 368, Institute for Empirical Research in Economics - University of Zurich.
    12. Fischer, Justina A.V. & Torgler, Benno, 2006. "Does Envy Destroy Social Fundamentals? The Impact of Relative Income Position," Economic Theory and Applications Working Papers 12177, Fondazione Eni Enrico Mattei (FEEM).
    13. Jie Chen & Mingzhi Hu, 2019. "What types of homeowners are more likely to be entrepreneurs? The evidence from China," Small Business Economics, Springer, vol. 52(3), pages 633-649, March.
    14. Benno Torgler & Sascha L. Schmidt & Bruno S. Frey, 2006. "The Power of Positional Concerns: A Panel Analysis," CREMA Working Paper Series 2006-19, Center for Research in Economics, Management and the Arts (CREMA).
    15. Hanming Fang & Long Wang & Yang Yang, 2022. "Housing Wealth and Online Consumer Behavior:Evidence from Xiong'an New Area in China," PIER Working Paper Archive 22-021, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania.
    16. Salari, Mahmoud & Javid, Roxana J., 2019. "How does female labor force participation impact on housing values?," Research in Economics, Elsevier, vol. 73(2), pages 129-137.
    17. Andrei Polbin & Sergey Drobyshevsky, 2014. "Developing a Dynamic Stochastic Model of General Equilibrium for the Russian Economy," Research Paper Series, Gaidar Institute for Economic Policy, issue 166P, pages 156-156.
    18. Aronsson, Thomas & Johansson-Stenman, Olof, 2014. "Positional preferences in time and space: Optimal income taxation with dynamic social comparisons," Journal of Economic Behavior & Organization, Elsevier, vol. 101(C), pages 1-23.
    19. Alla Koblyakova & Larisa Fleishman & Orly Furman, 2022. "Accuracy of Households’ Dwelling Valuations, Housing Demand and Mortgage Decisions: Israeli Case," The Journal of Real Estate Finance and Economics, Springer, vol. 65(1), pages 48-74, July.
    20. Kindermann, Fabian & Mayr, Lukas & Sachs, Dominik, 2020. "Inheritance taxation and wealth effects on the labor supply of heirs," Journal of Public Economics, Elsevier, vol. 191(C).

    More about this item

    Keywords

    Housing wealth; Relative measure; Labor supply;
    All these keywords.

    JEL classification:

    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • R20 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - General
    • R30 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:jhouse:v:55:y:2022:i:c:s1051137721000656. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/inca/622881 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.