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House prices, wealth effects and labor supply

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  • Richard Disney

    (Institute for Fiscal Studies and University of Sussex)

  • John Gathergood

    (Institute for Fiscal Studies and University of Nottingham)

Abstract

We examine the impact of housing wealth on labor supply decisions using data on exogenous local variation in house prices merged into household panel data for Britain. Our estimates are conditioned on variations in local labor demand and income expectations as these may co-determine housing wealth and labor supply. We use renters as a control group and test for the potential endogeneity of tenure and location. We find significant housing wealth effects on labor supply among young married / co-habiting female owners and older male owners, consistent with leisure being a normal good. The size of these effects is economically important. Our estimates imply housing wealth effects have stronger effects then local labor market conditions upon participation decisions for these workers.

Suggested Citation

  • Richard Disney & John Gathergood, 2014. "House prices, wealth effects and labor supply," IFS Working Papers W14/25, Institute for Fiscal Studies.
    • Handle: RePEc:ifs:ifsewp:14/25
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

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