Housing tenure and labor market impacts: The search goes on
We develop two search-theoretic models emphasizing firm entry to examine the Oswald hypothesis, the idea that homeownership is linked to inferior labor market outcomes, and compare their predictions to three extant theories. The five models have surprisingly different predictions about the labor market at both the aggregate and micro levels. Using a suitable instrumental variable strategy, we estimate both micro and aggregate level regression models of wages and unemployment and compare the estimates to those predictions. We find that while homeowners are less likely to be unemployed, they also have lower wages, all else equal, compared to renters. In addition, higher regional homeownership rates are associated with a greater probability of individual worker unemployment and higher wages. The outcome of a horserace between our new search-theoretic models is mixed--the wage-posting model predicts observed unemployment impacts while a bargaining variant does a better job explaining observed wages and aggregate labor market outcomes. Overall, we conclude that firm behavior is important for understanding the labor market impacts of homeownership. Because this is the case, regional homeownership rates are not good instruments for individual tenure choice in empirical work. And while individual homeowners may have inferior labor market outcomes as compared to renters, from the viewpoint of society, higher homeownership rates may result in greater job creation and overall production, among other benefits.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Pablo Casas-Arce & Albert Saiz, 2006. "Owning versus leasing: do courts matter?," Working Papers 06-21, Federal Reserve Bank of Philadelphia.
- Li Gan & Qinghua Zhang, 2005.
"The Thick Market Effect on Local Unemployment Rate Fluctuations,"
NBER Working Papers
11248, National Bureau of Economic Research, Inc.
- Gan, Li & Zhang, Qinghua, 2006. "The thick market effect on local unemployment rate fluctuations," Journal of Econometrics, Elsevier, vol. 133(1), pages 127-152, July.
- Qinghua Zhang & Li Gan, 2004. "The thick market effect of local unemployment rate fluctuation," Econometric Society 2004 North American Winter Meetings 179, Econometric Society.
- Munch, Jakob Roland & Rosholm, Michael & Svarer, Michael, "undated".
"Are Home Owners Really More Unemployed?,"
Economics Working Papers
2003-15, Department of Economics and Business Economics, Aarhus University.
- 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.
- Munch, Jakob R. & Rosholm, Michael & Svarer, Michael, 2003. "Are Home Owners Really More Unemployed?," IZA Discussion Papers 872, Institute for the Study of Labor (IZA).
- Chan, Sewin, 2001. "Spatial Lock-in: Do Falling House Prices Constrain Residential Mobility?," Journal of Urban Economics, Elsevier, vol. 49(3), pages 567-586, May.
- Munch, Jakob R. & Rosholm, Michael & Svarer, Michael, 2006.
"Home Ownership, Job Duration and Wages,"
IZA Discussion Papers
2110, Institute for the Study of Labor (IZA).
- Jakob Roland Munch & Michael Rosholm & Michael Svarer, 2006. "Home Ownership, Job Duration, and Wages," Economics Working Papers 2006-06, Department of Economics and Business Economics, Aarhus University.
- Jakob Roland Munch & Michael Rosholm & Michael Svarer, 2006. "Home Ownership, Job Duration, and Wages," CAM Working Papers 2006-08, University of Copenhagen. Department of Economics. Centre for Applied Microeconometrics.
- Dohmen, Thomas, 2000.
"Housing, Mobility and Unemployment,"
IZA Discussion Papers
210, Institute for the Study of Labor (IZA).
- Michiel van Leuvensteijn & Pierre Koning, 2006.
"The Effect of Home-Ownership on Labour Mobility in the Netherlands,"
in: Labour Market Adjustments in Europe, chapter 6
Edward Elgar Publishing.
- 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.
- M. van Leuvensteijn & P. Koning, 2004. "The Effect of Home-ownership on Labor Mobility in The Netherlands," Working Papers 04-01, Utrecht School of Economics.
- Angrist, Joshua D & Evans, William N, 1998.
"Children and Their Parents' Labor Supply: Evidence from Exogenous Variation in Family Size,"
American Economic Review,
American Economic Association, vol. 88(3), pages 450-477, June.
- Joshua D. Angrist & William N. Evans, 1996. "Children and Their Parents' Labor Supply: Evidence from Exogenous Variation in Family Size," NBER Working Papers 5778, National Bureau of Economic Research, Inc.
- Diamond, Peter A., 1971. "A model of price adjustment," Journal of Economic Theory, Elsevier, vol. 3(2), pages 156-168, June.
- Coulson, N Edward & Laing, Derek & Wang, Ping, 2001. "Spatial Mismatch in Search Equilibrium," Journal of Labor Economics, University of Chicago Press, vol. 19(4), pages 949-972, October.
- DiPasquale, Denise & Glaeser, Edward L., 1999.
"Incentives and Social Capital: Are Homeowners Better Citizens?,"
Journal of Urban Economics,
Elsevier, vol. 45(2), pages 354-384, March.
- Denice DiPasquale & Edward L. Glaeser, 1997. "Incentives and Social Capital: Are Homeowners Better Citizens?," Harvard Institute of Economic Research Working Papers 1815, Harvard - Institute of Economic Research.
- Denise DiPasquale & Edward L. Glaeser, 1998. "Incentives and Social Capital: Are Homeowners Better Citizens?," NBER Working Papers 6363, National Bureau of Economic Research, Inc.
- Paul Flatau & Matt Forbes & Patric H. Hendershott, 2003. "Homeownership and Unemployment: The Roles of Leverage and Public Housing," NBER Working Papers 10021, National Bureau of Economic Research, Inc.
- Javier A. Barrios Garcia & Jose E. Rodriguez Hernandez, 2004. "User Cost Changes, Unemployment and Home-ownership: Evidence from Spain," Urban Studies, Urban Studies Journal Limited, vol. 41(3), pages 563-578, March.
- Hughes, Gordon & McCormick, Barry, 1981. "Do Council Housing Policies Reduce Migration between Regions?," Economic Journal, Royal Economic Society, vol. 91(364), pages 919-937, December.
- Harminder Battu & Ada Ma & Euan Phimister, 2008. "Housing Tenure, Job Mobility and Unemployment in the UK," Economic Journal, Royal Economic Society, vol. 118(527), pages 311-328, 03.
When requesting a correction, please mention this item's handle: RePEc:eee:juecon:v:65:y:2009:i:3:p:252-264. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Dana Niculescu)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.