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House prices and female labor force participation

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  • Johnson, William R.

Abstract

Is there a causal connection between house prices and labor force participation of married women? The simple correlation between house prices and married women’s labor force participation across U.S. metro areas is positive. Plausible, informal arguments have been advanced to support causation in either direction: prices raising participation (negative income effects of higher house prices lead more married women to work) or participation raising prices (richer two-earner households bid up the price of scarce housing). I construct an equilibrium model of location, labor supply and real estate (land) prices within a metro area which predicts that (1) metro areas with exogenously less buildable land will have higher house prices and more labor force participation of married women, while (2) metro areas with married women exogenously more prone to work will have higher house prices. Using geographic instruments for housing supply, I find little evidence of a positive effect of house prices on married women’s labor force participation, but a somewhat greater possibility that house prices raise their earnings. Likewise, an instrument for married women’s labor supply reveals no consistent significant causal effect of two earner households on housing prices, although the possibility of a positive effect cannot be ruled out.

Suggested Citation

  • Johnson, William R., 2014. "House prices and female labor force participation," Journal of Urban Economics, Elsevier, vol. 82(C), pages 1-11.
    • Handle: RePEc:eee:juecon:v:82:y:2014:i:c:p:1-11
    DOI: 10.1016/j.jue.2014.05.001
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    1. Xiandeng Jiang & Zheng Pan & Ningru Zhao, 2023. "Relative Value vs Absolute Value: Housing Wealth and Labor Supply," The Journal of Real Estate Finance and Economics, Springer, vol. 66(1), pages 41-76, January.
    2. Adler, Martin W. & van Ommeren, Jos N., 2016. "Does public transit reduce car travel externalities? Quasi-natural experiments' evidence from transit strikes," Journal of Urban Economics, Elsevier, vol. 92(C), pages 106-119.
    3. Jianmei Zhao & Lin Liu & Ruihan Liu, 2018. "How house price appreciation affects homeowners' labour force participation : Evidence from urban China," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 26(2), pages 233-252, April.
    4. Abe, Yukiko, 2016. "On the convergence in female participation rates," Discussion paper series. A 301, Graduate School of Economics and Business Administration, Hokkaido University.
    5. Yukiko Abe, 2016. "On the convergence in female participation rates," ERSA conference papers ersa16p473, European Regional Science Association.
    6. Fu, Shihe & Liao, Yu & Zhang, Junfu, 2016. "The effect of housing wealth on labor force participation: Evidence from China," Journal of Housing Economics, Elsevier, vol. 33(C), pages 59-69.
    7. Li, Han & Li, Jiangyi & Lu, Yi & Xie, Huihua, 2020. "Housing wealth and labor supply: Evidence from a regression discontinuity design," Journal of Public Economics, Elsevier, vol. 183(C).
    8. Anthony M. Yezer & Daniel A. Broxterman, 2014. "Why Does Skill Intensity Vary Across Cities? Housing Cost and True Human Capital," Working Papers 2014-15, The George Washington University, Institute for International Economic Policy.
    9. Anil Kumar & Che-Yuan Liang, 2018. "Labor Market Effects of Credit Constraints: Evidence from a Natural Experiment," Working Papers 1810, Federal Reserve Bank of Dallas, revised 04 Feb 2023.
    10. Broxterman, Daniel A. & Yezer, Anthony M., 2015. "Why does skill intensity vary across cities? The role of housing cost," Regional Science and Urban Economics, Elsevier, vol. 55(C), pages 14-27.
    11. Wrenn, Douglas H. & Yi, Junjian & Zhang, Bo, 2019. "House prices and marriage entry in China," Regional Science and Urban Economics, Elsevier, vol. 74(C), pages 118-130.
    12. Salari, Mahmoud & Javid, Roxana J., 2019. "How does female labor force participation impact on housing values?," Research in Economics, Elsevier, vol. 73(2), pages 129-137.
    13. Hong Liu & Lili Liu & Fei Wang, 2023. "Housing wealth and fertility: evidence from China," Journal of Population Economics, Springer;European Society for Population Economics, vol. 36(1), pages 359-395, January.
    14. Deng, Yongheng & Gyourko, Joseph & Li, Teng, 2019. "Singapore's cooling measures and its housing market," Journal of Housing Economics, Elsevier, vol. 45(C), pages 1-1.
    15. Abe, Yukiko, 2018. "Effects of demographic compositional changes on the convergence of female participation rates," Journal of the Japanese and International Economies, Elsevier, vol. 48(C), pages 97-104.
    16. Jiang, Xiandeng & Zhao, Ningru & Pan, Zheng, 2022. "Regional housing wealth, relative housing wealth and labor market behavior," Journal of Housing Economics, Elsevier, vol. 55(C).
    17. Bechara, Peggy & Eilers, Lea & Paloyo, Alfredo R., 2015. "In Good Company – Neighborhood Quality and Female Employment," Ruhr Economic Papers 535, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    18. Asif Ehsan, Syed Mortuza & AKTER, SHAHARIA, 2020. "Vulnerability Resilience and Female Labor Force Participation: Evidence from Shocks on Rural Households in Bangladesh," MPRA Paper 118270, University Library of Munich, Germany.
    19. Lea Eilers & Alfredo R. Paloyo & Peggy Bechara, 2022. "The effect of peer employment and neighborhood characteristics on individual employment," Empirical Economics, Springer, vol. 62(4), pages 1885-1908, April.
    20. Martin W. Adler & Jos N. van Ommeren, 2015. "Does Public Transit reduce Car Travel Externalities?," Tinbergen Institute Discussion Papers 15-011/VIII, Tinbergen Institute.

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    More about this item

    Keywords

    Labor force participation; Housing prices;

    JEL classification:

    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • R2 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis
    • R3 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location

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