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Unemployment Risk and the Timing of Homeownership in Japan

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  • Yoko Moriizumi

    (Faculty of Economics, Kanagawa University)

  • Michio Naoi

    (Faculty of Business and Commerce, Keio University)

Abstract

The effect of unemployment risk on the timing of homeownership is examined through the use of a retrospective panel of Japanese households. We obtain the following results by applying the split population duration (SPD) model: (1) unemployment risk, as proxied by the probability of unemployment, has a significantly negative effect on homeownership and delays its timing, (2) the effect of unemployment risk is overestimated in previous studies, which assume that all households will eventually become homeowners, and (3) household characteristics as well as the conditions of housing and labour markets at the early stages of a household's life cycle play an important role in the determination of its housing purchase. Finally, our simulation results indicate that an initial one-year unemployment spell will have a fairly large impact of 1.6-year delay in the timing of a subsequent home purchase.

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Bibliographic Info

Paper provided by Keio/Kyoto Joint Global COE Program in its series Keio/Kyoto Joint Global COE Discussion Paper Series with number 2008-026.

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Length: 27 pages
Date of creation: 2008
Date of revision:
Handle: RePEc:kei:dpaper:2008-026

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Web page: http://ies.keio.ac.jp/old_project/old/gcoe-econbus/
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  1. Piyush Tiwari & Edwin Deutsch & Yoko Moriizumi, 2007. "Housing Finance Arrangements, Wealth Positioning and Housing Consumption in Japan: An Analysis of Built-for-sale Homeowners," The Journal of Real Estate Finance and Economics, Springer, vol. 34(3), pages 347-367, April.
  2. DeYoung, Robert, 2003. "The failure of new entrants in commercial banking markets: a split-population duration analysis," Review of Financial Economics, Elsevier, vol. 12(1), pages 7-33.
  3. Diaz-Serrano, Luis, 2005. "Labor income uncertainty, skewness and homeownership: A panel data study for Germany and Spain," Journal of Urban Economics, Elsevier, vol. 58(1), pages 156-176, July.
  4. Machin, Stephen & Manning, Alan, 1999. "The causes and consequences of longterm unemployment in Europe," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 47, pages 3085-3139 Elsevier.
  5. Fu, Yuming, 1995. "Uncertainty, liquidity, and housing choices," Regional Science and Urban Economics, Elsevier, vol. 25(2), pages 223-236, April.
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  7. Deutsch, Edwin & Tiwari, Piyush & Moriizumi, Yoko, 2006. "The slowdown in the timing of housing purchases in Japan in the 1990s," Journal of Housing Economics, Elsevier, vol. 15(3), pages 230-256, September.
  8. Belzil, Christian, 1995. "Unemployment Insurance and Unemployment over Time: An Analysis with Event History Data," The Review of Economics and Statistics, MIT Press, vol. 77(1), pages 113-26, February.
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  10. Guiso, Luigi & Jappelli, Tullio, 2002. "Private Transfers, Borrowing Constraints and the Timing of Homeownership," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 34(2), pages 315-39, May.
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  17. Engen, Eric M. & Gruber, Jonathan, 2001. "Unemployment insurance and precautionary saving," Journal of Monetary Economics, Elsevier, vol. 47(3), pages 545-579, June.
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  20. Di Salvo, Pamela & Ermisch, John, 1997. "Analysis of the Dynamics of Housing Tenure Choice in Britain," Journal of Urban Economics, Elsevier, vol. 42(1), pages 1-17, July.
  21. Peter Schmidt & Ann Dryden Witte, 1989. "Predicting Criminal Recidivism Using "Split Population" Survival Time Models," NBER Working Papers 2445, National Bureau of Economic Research, Inc.
  22. Berg, G. van den & Ours, J.C. van, 1996. "Unemployment dynamics and duration dependence," Open Access publications from Tilburg University urn:nbn:nl:ui:12-86874, Tilburg University.
  23. Diaz-Serrano, Luis, 2005. "On the negative relationship between labor income uncertainty and homeownership: Risk-aversion vs. credit constraints," Journal of Housing Economics, Elsevier, vol. 14(2), pages 109-126, June.
  24. Moriizumi, Yoko, 2003. "Targeted saving by renters for housing purchase in Japan," Journal of Urban Economics, Elsevier, vol. 53(3), pages 494-509, May.
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