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House Prices and Job Losses

Author

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  • Gábor Pintér

Abstract

This article studies the strong co-movement between house prices and job losses over the UK business cycle. An aggregate SVAR and a regional proxy SVAR model are used to provide empirical evidence on the effect of house prices on labour markets. To explain the mechanism, a general equilibrium model with collateral constraints, endogenous job separation and housing shocks is estimated via Bayesian methods. I find that shocks to housing demand: (i) explain about 10–20% of output fluctuations and 20–30% of labour market fluctuations via the collateral channel; and (ii) were a major cause in triggering the 1990 and 2008 recessions.

Suggested Citation

  • Gábor Pintér, 2019. "House Prices and Job Losses," The Economic Journal, Royal Economic Society, vol. 129(618), pages 991-1013.
    • Handle: RePEc:oup:econjl:v:129:y:2019:i:618:p:991-1013.
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    File URL: http://hdl.handle.net/10.1111/ecoj.12613
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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. House Prices and Job Losses
      by bankunderground in Bank Underground on 2015-12-11 13:30:42
    2. 'House Prices and Job Losses'
      by Mark Thoma in Economist's View on 2015-12-11 06:15:00

    Citations

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    Cited by:

    1. Saleem Bahaj & Angus Foulis & Gabor Pinter, 2020. "Home Values and Firm Behavior," American Economic Review, American Economic Association, vol. 110(7), pages 2225-2270, July.
    2. Ryan Niladri Banerjee & Kristian S Blickle, 2016. "Housing collateral and small firm activity in Europe," BIS Working Papers 575, Bank for International Settlements.
    3. Ma, Li & Sang, Di, 2024. "Would carbon tax policy promote real estate prices?," International Review of Financial Analysis, Elsevier, vol. 96(PA).
    4. Teodora Cristina Barbu & Mariana Vu?a & Adina Ionela Strachinaru & Sorin Iulian Cioaca, 2017. "An Assessment of the Immigration Impact on the International Housing Price," The AMFITEATRU ECONOMIC journal, Academy of Economic Studies - Bucharest, Romania, vol. 19(46), pages 682-682, August.
    5. Blickle, Kristian, 2022. "Local banks, credit supply, and house prices," Journal of Financial Economics, Elsevier, vol. 143(2), pages 876-896.
    6. Garreth Rule, 2015. "Understanding the central bank balance sheet," Handbooks, Centre for Central Banking Studies, Bank of England, number 32, April.
    7. Philip Arestis & Ana Rosa Gonzalez‐Martinez, 2019. "Economic precariousness: A new channel in the housing market cycle," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 24(2), pages 1030-1043, April.
    8. Liu, Huake & Nie, He & Sang, Di & Wang, Yu & Zhang, Xueren, 2025. "Optimizing green subsidy policies for decarbonization in Southeast Asia's real estate sector," Energy Economics, Elsevier, vol. 144(C).
    9. Javier Ferri & Francisca Herranz-Baez, 2023. "Building on fiscal policy: government consumption and the residential sector. When helping hurts," Working Papers 2023-01, FEDEA.
    10. Philip Bunn & Jagjit Chadha & Thomas Lazarowicz & Stephen Millard & Emma Rockall, 2021. "Household debt and labour supply," Bank of England working papers 941, Bank of England.

    More about this item

    JEL classification:

    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • E27 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Forecasting and Simulation: Models and Applications
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy

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