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Does High Home-Ownership Impair the Labor Market?

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  • Blanchflower, David G.

    ()
    (Dartmouth College)

  • Oswald, Andrew J.

    ()
    (University of Warwick)

Abstract

This study explores the hypothesis that high home-ownership damages the labor market. We show that rises in the home-ownership rate in a U.S. state are a precursor to eventual sharp rises in unemployment in that state. The elasticity exceeds unity: a doubling of the rate of home-ownership in a U.S. state is followed in the long-run by more than a doubling of the later unemployment rate. What mechanisms might explain this? We provide evidence that rises in home-ownership are associated with three potential concerns: (i) lower levels of labor mobility, (ii) greater commuting times, and (iii) fewer new businesses. Our argument is not that owners are disproportionately unemployed, nor that the observed patterns are due to Keynesian effects. The evidence implies, instead, that the housing market may produce negative 'externalities' upon the labor market. The time lags are long. That gradualness may explain why these patterns remain little-known.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 7640.

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Length: 58 pages
Date of creation: Sep 2013
Date of revision:
Handle: RePEc:iza:izadps:dp7640

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Keywords: natural rate of unemployment; labor market; housing market; structural; business cycles; mobility;

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References

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  22. Serafinelli, Michel, 2013. "Good Firms, Worker Flows and Productivity," MPRA Paper 49055, University Library of Munich, Germany, revised 12 Aug 2013.
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Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. Does High Home-Ownership Impair the Labor Market?
    by maximorossi in NEP-LTV blog on 2013-10-24 17:03:03
  2. Does High Home-Ownership Impair the Labor Market?
    by maximorossi in NEP-LTV blog on 2013-06-11 20:45:09

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