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Homeownership and labour-market behaviour: interpreting the evidence

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  • Jan Rouwendal
  • Peter Nijkamp

Abstract

This paper attempts to explain the repeated empirical finding that homeowners have shorter unemployment durations than tenants, even though Oswald’s hypothesis predicts longer unemployment durations for homeowners. The search models that have been proposed to motivate Oswald’s thesis have difficulties in providing an explanation for the reverse of the Oswald effect. The model proposed in this paper is close to the ones proposed earlier, in that it also studies search behaviour, but contains a richer set of effects of homeownership on search behaviour. In our model, homeowners may have a higher intensity of job search (and hence shorter unemployment durations) when their housing expenses are—all other things being equal—higher than those of tenants. Some studies have indeed found that the shorter unemployment durations occur especially among highly leveraged homeowners. We show that, in the Netherlands, many homeowners have higher housing costs than otherwise comparable tenants. The model developed in this paper is therefore able to explain the existing evidence of shorter unemployment durations for Dutch homeowners.

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Bibliographic Info

Article provided by Pion Ltd, London in its journal Environment and Planning A.

Volume (Year): 42 (2010)
Issue (Month): 2 (February)
Pages: 419-433

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Handle: RePEc:pio:envira:v:42:y:2010:i:2:p:419-433

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References

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  1. Rasmus Lentz & Torben Tranaes, 2001. "Job Search and Savings: Wealth Effects and Duration Dependence," CESifo Working Paper Series 461, CESifo Group Munich.
  2. David Card & Raj Chetty & Andrea Weber, 2007. "Cash-On-Hand and Competing Models of Intertemporal Behavior: New Evidence from the Labor Market," The Quarterly Journal of Economics, MIT Press, vol. 122(4), pages 1511-1560, November.
  3. Berg, G.J. van den & Gorter, C., 1996. "Job search and commuting time," Serie Research Memoranda 0001, VU University Amsterdam, Faculty of Economics, Business Administration and Econometrics.
  4. Munch, Jakob Roland & Rosholm, Michael & Svarer, Michael, 2008. "Home ownership, job duration, and wages," Journal of Urban Economics, Elsevier, vol. 63(1), pages 130-145, January.
  5. Carole Brunet & Jean-Yves Lesueur, 2003. "Do homeowners stay unemployed longer ? A French micro-econometric study," Post-Print halshs-00178576, HAL.
  6. Oswald Andrew J., 1996. "A Conjecture on the Explanation for High Unemployment in the Industrialized Nations : Part I," The Warwick Economics Research Paper Series (TWERPS) 475, University of Warwick, Department of Economics.
  7. Henley, Andrew, 1998. "Residential Mobility, Housing Equity and the Labour Market," Economic Journal, Royal Economic Society, vol. 108(447), pages 414-27, March.
  8. Raj Chetty, 2008. "Moral Hazard vs. Liquidity and Optimal Unemployment Insurance," NBER Working Papers 13967, National Bureau of Economic Research, Inc.
  9. repec:ese:iserwp:2006-08 is not listed on IDEAS
  10. Mark Partridge & Dan Rickman, 1997. "The Dispersion of US State Unemployment Rates: The Role of Market and Non-market Equilibrium Factors," Regional Studies, Taylor & Francis Journals, vol. 31(6), pages 593-606.
  11. Raj Chetty, 2004. "Consumption Commitments, Unemployment Durations, and Local Risk Aversion," NBER Working Papers 10211, National Bureau of Economic Research, Inc.
  12. Stephen Nickell, 1997. "Unemployment and Labor Market Rigidities: Europe versus North America," Journal of Economic Perspectives, American Economic Association, vol. 11(3), pages 55-74, Summer.
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Cited by:
  1. Baert, Stijn & Heylen, Freddy & Isebaert, Daan, 2013. "Does Homeownership Lead to Longer Unemployment Spells? The Role of Mortgage Payments," IZA Discussion Papers 7774, Institute for the Study of Labor (IZA).
  2. Allen Head & Huw Lloyd-Ellis, 2012. "Housing Liquidity, Mobility, and the Labour Market," Review of Economic Studies, Oxford University Press, vol. 79(4), pages 1559-1589.
  3. Rodríguez Hernández, José E. & Barrios García, Javier A., 2012. "¿Incide la forma de tenencia de la vivienda habitual sobre la situación de empleo en España?/Does the Housing Tenure Choice Affect the Employment Situation in Spain?," Estudios de Economía Aplicada, Estudios de Economía Aplicada, vol. 30, pages 751 (22 pag, Agosto.

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