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Houses and/or jobs: ownership and the labour market in Belgian districts

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  • D. ISEBAERT

    ()

  • F. HEYLEN
  • C. SMOLDERS

Abstract

In a number of papers A.J. Oswald (1996, 1997) argues that high rates of home ownership may imply inferior labour market outcomes. This paper tests the Oswald hypothesis in a panel of 42 Belgian districts since the 1970s. The use of data going back to 1970 allows us to embed the Oswald hypothesis in a broader model including other key determinants of employment like labour costs and productivity, the skill level of the population, and demography. Considering that ownership may be endogenous to (shocks in) employment, we use IV estimation methods. Overall, we find evidence in favour of the Oswald hypothesis. We observe that a 1 percentage point rise in the rate of home ownership in a district implies a statistically significant fall in the employment rate by about 0.3 percentage points. Our results underscore the importance of including other determinants of employment, of controlling for unobserved fixed regional and time effects, and of appropriately dealing with endogeneity. Disregarding these issues, as is often done in the macro labour literature, may imply very different estimation results. Additional estimation reveals that the size of the Oswald effect falls in the fraction of high skilled in a district.

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File URL: http://www.feb.ugent.be/nl/Ondz/wp/Papers/wp_10_695.pdf
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Bibliographic Info

Paper provided by Ghent University, Faculty of Economics and Business Administration in its series Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium with number 10/695.

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Length: 30 pages
Date of creation: Dec 2010
Date of revision:
Handle: RePEc:rug:rugwps:10/695

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Keywords: employment; home ownership; Oswald hypothesis; Belgian regions; panel data;

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  1. Boheim, Rene & Taylor, Mark P, 2002. "Tied Down or Rome to Move? Investigating the Relationships between Housing Tenure, Employment Status and Residential Mobility in Britain," Scottish Journal of Political Economy, Scottish Economic Society, vol. 49(4), pages 369-92, September.
  2. Paul van den Noord, 2003. "Tax Incentives and House Price Volatility in the Euro Area: Theory and Evidence," OECD Economics Department Working Papers 356, OECD Publishing.
  3. van Leuvensteijn, Michiel & Koning, Pierre, 2004. "The effect of home-ownership on labor mobility in the Netherlands," Journal of Urban Economics, Elsevier, vol. 55(3), pages 580-596, May.
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Cited by:
  1. S. Baert & F. Heylen & D. Isebaert, 2013. "Does homeownership lead to longer unemployment spells? The role of mortgage payments," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 13/858, Ghent University, Faculty of Economics and Business Administration.
  2. Peter Huber, 2013. "Labour Market Institutions and Regional Unemployment Disparities," WWWforEurope Working Papers series 29, WWWforEurope.

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