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Mortgage Market, Housing Tenure Choice and Unemployment

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  • Gaetano Lisi

    (University of Cassino and Southern Lazio)

Abstract

Following the evidence that housing costs may impair the proper functioning of the labour market, this paper develops a search and matching model where trading frictions in the mortgage, housing and labour markets interact with each other. Precisely, the employment status affects the probability to get a mortgage. In turn, the granting or not of the mortgage affects the housing tenure choice (tenancy or owner occupancy). Finally, the housing tenure choice affects the unemployment rate. It will show that tenants generate a greater effort in searching for a job than homeowners, since employed workers have a greater chance of getting a mortgage to buy a home. As a result, the positive correlation between the homeownership and unemployment rates emerges as quite consistent with the evidence that homeowners tend to be unemployed less often than tenants.

Suggested Citation

  • Gaetano Lisi, 2016. "Mortgage Market, Housing Tenure Choice and Unemployment," The Journal of Real Estate Finance and Economics, Springer, vol. 53(4), pages 472-493, November.
    • Handle: RePEc:kap:jrefec:v:53:y:2016:i:4:d:10.1007_s11146-015-9533-0
    DOI: 10.1007/s11146-015-9533-0
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    Cited by:

    1. Gaetano Lisi, 2017. "Homeownership and new entrepreneurs: first empirical evidence of a bidirectional interaction," Applied Economics, Taylor & Francis Journals, vol. 49(60), pages 5983-5991, December.
    2. Gaetano Lisi, 2018. "Unemployment, vacancies and housing tenure," Letters in Spatial and Resource Sciences, Springer, vol. 11(3), pages 333-341, October.

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    More about this item

    Keywords

    Search and matching frictions; Mortgage market; Housing costs; Housing tenure choice; Search intensity; Unemployment;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets

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