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Home Equity and Labor Income: The Role of Constrained Mobility

Author

Listed:
  • Radhakrishnan Gopalan
  • Barton H Hamilton
  • Ankit Kalda
  • David Sovich
  • Holger Mueller

Abstract

Using detailed data for U.S. homeowners, we document a negative, nonlinear relation between the loan-to-value ratio (LTV) of homeowners’ primary residence and their labor income. Consistent with high LTV individuals experiencing constrained mobility, we find stronger effects among subprime, liquidity- constrained individuals and those living in regions with limited alternative local employment opportunities and strict noncompete law enforcement. Though high LTV individuals are less likely to move across MSAs, they are more likely to change jobs without changing their residence. We find no effects among similar neighboring renters employed at the same firm and with a similar job tenure.

Suggested Citation

  • Radhakrishnan Gopalan & Barton H Hamilton & Ankit Kalda & David Sovich & Holger Mueller, 2021. "Home Equity and Labor Income: The Role of Constrained Mobility," The Review of Financial Studies, Society for Financial Studies, vol. 34(10), pages 4619-4662.
    • Handle: RePEc:oup:rfinst:v:34:y:2021:i:10:p:4619-4662.
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    File URL: http://hdl.handle.net/10.1093/rfs/hhaa136
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    Cited by:

    1. Qingliang Fan & Zijian Guo & Ziwei Mei & Cun-Hui Zhang, 2023. "Uniform Inference for Nonlinear Endogenous Treatment Effects with High-Dimensional Covariates," Papers 2310.08063, arXiv.org, revised Oct 2023.

    More about this item

    JEL classification:

    • D10 - Microeconomics - - Household Behavior - - - General
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
    • J62 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Job, Occupational and Intergenerational Mobility; Promotion
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • R20 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - General

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