Does homeownership impair employment? Evidence from migrant data in transitional China

China now has a higher rate of homeownership than most country counterparts in the world. How might have China’s high homeownership rate affected the employment outcome and efficiency of labor markets? In this study, ‌we challenge the theoretical premise that homeownership reduces labor mobility and employment flexibility by examining China’s migrant data‌. Our key empirical finding is that, at the individual level, compared to renting option, homeownership in destination city does lead to a lower employment probability. Older workers, urban hukou holders, and migrants in destination cities with more than 5 million population are more impaired in employment. The possible mechanisms underlying lower employment propensity lie in that homeownership impedes labor mobility, resulting in lower wage prospect from constrained labor market area which further discourages job search effort. Furthermore, purchase costs associated with homeownership may also lower household disposable income, making it harder to venture into self-employment business. Our study sheds new lights on the importance of incorporating employment creation element within current housing policies, particularly in rapid urbanization era of a transition economy.