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House lock and structural unemployment

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  • Valletta, Robert G.

Abstract

A recent decline in internal migration in the United States may have been caused in part by falling house prices, through the “lock in” effects of financial constraints faced by households whose housing debt exceeds the market value of their home. I analyze the relationship between such “house lock” and the elevated levels and persistence of unemployment during the recent recession and its aftermath, using data for the years 2008–11. Because house lock is likely to extend job search in the local labor market for homeowners whose home value has declined, I focus on differences in unemployment duration between homeowners and renters across geographic areas differentiated by the severity of the decline in home prices. The empirical analyses rely on microdata from the monthly Current Population Survey (CPS) files and on an econometric method that enables the estimation of individual and aggregate covariate effects on unemployment durations using repeated cross-section data. I do not uncover systematic evidence to support the house-lock hypothesis.

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  • Valletta, Robert G., 2013. "House lock and structural unemployment," Labour Economics, Elsevier, vol. 25(C), pages 86-97.
  • Handle: RePEc:eee:labeco:v:25:y:2013:i:c:p:86-97
    DOI: 10.1016/j.labeco.2013.04.002
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    Cited by:

    1. Bricker, Jesse & Bucks, Brian, 2016. "Negative home equity, economic insecurity, and household mobility over the Great Recession," Journal of Urban Economics, Elsevier, vol. 91(C), pages 1-12.
    2. Foote, Andrew, 2016. "The effects of negative house price changes on migration: Evidence across U.S. housing downturns," Regional Science and Urban Economics, Elsevier, vol. 60(C), pages 292-299.
    3. Brown, Jennifer & Matsa, David A., 2020. "Locked in by leverage: Job search during the housing crisis," Journal of Financial Economics, Elsevier, vol. 136(3), pages 623-648.
    4. Kusum Mundra & Fernando Rios-Avila, 2021. "Using repeated cross-sectional data to examine the role of immigrant birth-country networks on unemployment duration: an application of Guell and Hu (2006) approach," Empirical Economics, Springer, vol. 61(1), pages 389-415, July.
    5. Yagan, Danny, 2016. "The Enduring Employment Impact of Your Great Recession Location," Institute for Research on Labor and Employment, Working Paper Series qt12d0w9bs, Institute of Industrial Relations, UC Berkeley.
    6. Fernando Rios-Avila & Gustavo Canavire-Bacarreza, 2020. "The Effect of Immigration on Labor Market Transitions of Native-Born Unemployed in the United States," Journal of Labor Research, Springer, vol. 41(3), pages 295-331, September.
    7. Fernando Rios-Avila & Gustavo Canavire-Bacarreza, 0. "The Effect of Immigration on Labor Market Transitions of Native-Born Unemployed in the United States," Journal of Labor Research, Springer, vol. 0, pages 1-37.
    8. Caliendo, Marco & Cobb-Clark, Deborah A. & Hennecke, Juliane & Uhlendorff, Arne, 2019. "Locus of control and internal migration," Regional Science and Urban Economics, Elsevier, vol. 79(C).
    9. Meekes, Jordy & Hassink, Wolter H.J., 2019. "The role of the housing market in workers′ resilience to job displacement after firm bankruptcy," Journal of Urban Economics, Elsevier, vol. 109(C), pages 41-65.
    10. J. Meekes & W.H.J. Hassink, 2016. "The role of the housing market in workers’ resilience to job displacement after firm bankruptcy," Working Papers 16-10, Utrecht School of Economics.
    11. Chan, Sewin & Haughwout, Andrew & Tracy, Joseph, 2015. "How Mortgage Finance Affects the Urban Landscape," Handbook of Regional and Urban Economics, in: Gilles Duranton & J. V. Henderson & William C. Strange (ed.), Handbook of Regional and Urban Economics, edition 1, volume 5, chapter 0, pages 987-1045, Elsevier.
    12. Hugo Erken & Eric van Loon & Wouter Verbeek, 2015. "Mismatch on the Dutch labour market in the Great Recession," CPB Discussion Paper 303.rdf, CPB Netherlands Bureau for Economic Policy Analysis.
    13. Bloze, Gintautas & Skak, Morten, 2016. "Housing equity, residential mobility and commuting," Journal of Urban Economics, Elsevier, vol. 96(C), pages 156-165.
    14. Meekes, Jordy & Hassink, Wolter, 2017. "The Role of the Housing Market in Workers' Resilience to Job Displacement after Firm Bankruptcy," IZA Discussion Papers 10894, Institute of Labor Economics (IZA).
    15. Hugo Erken & Eric van Loon & Wouter Verbeek, 2015. "Mismatch on the Dutch labour market in the Great Recession," CPB Discussion Paper 303, CPB Netherlands Bureau for Economic Policy Analysis.
    16. Anna Zabai, 2017. "Household debt: recent developments and challenges," BIS Quarterly Review, Bank for International Settlements, December.

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    More about this item

    Keywords

    Unemployment; House prices; Mobility;
    All these keywords.

    JEL classification:

    • J6 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets

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