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The impact of homeownership on unemployment in the Netherlands

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  • Aico van Vuuren
  • Michiel van Leuvensteijn

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Abstract

We analyze the impact of homeownership on unemployment duration using a theoretical model of job search. Earlier studies suggest that this relationship should be positive because workers are less mobile when they own a home. Nevertheless, most of the empirical studies in Europe find an opposite relationship. In this paper, we investigate whether this is due to an omission in the original analysis or whether it is due to an endogeneity problem, i.e. those who can leave unemployment easily are more likely to be a homeowner. In our empirical analysis, we use additional information about the differences in unemployment benefits between homeowners and renters. We find that homeowners have higher hazard rates out of unemployment to a job in the local labour market. The impact is significant but not very large. Homeownership has a negative but insignificant impact on the hazard to leave unemployment to the non-local labour market. Finally, we find that homeowners would reduce their probability to receive a job offer from the local labour market when they become renters. The probability to receive a job offer from the non-local labour market would increase for short spells of unemployment when home owners become renters. However, this probability would be reduced for long spells of unemployment.

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Bibliographic Info

Paper provided by CPB Netherlands Bureau for Economic Policy Analysis in its series CPB Discussion Paper with number 86.

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Date of creation: Aug 2007
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Handle: RePEc:cpb:discus:86

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  1. Paul Frijters & Bas van der Klaauw, 2006. "Job Search with Nonparticipation," Economic Journal, Royal Economic Society, vol. 116(508), pages 45-83, 01.
  2. Michael Svarer & Michael Rosholm & Jacob Roland Munch, 2003. "Are Home Owners Really more Unemployed?," CAM Working Papers 2003-09, University of Copenhagen. Department of Economics. Centre for Applied Microeconometrics.
  3. Honore, Bo E, 1993. "Identification Results for Duration Models with Multiple Spells," Review of Economic Studies, Wiley Blackwell, vol. 60(1), pages 241-46, January.
  4. Berg, G.J. van den, 1987. "Nonstationarity in job search theory," Research Memorandum 242, Tilburg University, Faculty of Economics and Business Administration.
  5. van den Berg, Gerard J, 1992. "A Structural Dynamic Analysis of Job Turnover and the Costs Associated with Moving to Another Job," Economic Journal, Royal Economic Society, vol. 102(414), pages 1116-33, September.
  6. 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.
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Cited by:
  1. Carole Brunet & Nathalie Havet & Jean-Yves Lesueur, 2010. "Propriété immobilière et trajectoires salariales : Quelles leçons tirer de la comparaison France – Etats – Unis ?," Working Papers 1011, Groupe d'Analyse et de Théorie Economique (GATE), Centre national de la recherche scientifique (CNRS), Université Lyon 2, Ecole Normale Supérieure.
  2. Nathalie Havet & Alexis Penot, 2010. "Does Homeownership Harm Labour Market Performances? A Survey," Working Papers 1012, Groupe d'Analyse et de Théorie Economique (GATE), Centre national de la recherche scientifique (CNRS), Université Lyon 2, Ecole Normale Supérieure.

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