IDEAS home Printed from https://ideas.repec.org/p/ags/quedwp/273683.html

Housing Liquidity, Mobility, and the Labour Market

Author

Listed:
  • Head, Allen
  • Lloyd-Ellis, Huw

Abstract

We study the interactions among geographical mobility, unemployment and home- ownership in an economy with heterogeneous locations, endogenous construction and search frictions in the markets for both labour and housing. The decision of home- owners to accept job offers from other cities depends on how quickly they can sell their houses (i.e. their liquidity), which in turn depends on local labour market conditions. Consequently, home-owners accept job offers from other cities at a lower rate than do renters, generating a link between home-ownership and aggregate unemployment. When calibrated to match aggregate U.S. statistics on mobility, housing and labour flows, our model predicts that the effect of home-ownership on aggregate unemployment is small. When unemployment is high, however, changes in the rate of home-ownership can have economically significant effects.

Suggested Citation

  • Head, Allen & Lloyd-Ellis, Huw, 2011. "Housing Liquidity, Mobility, and the Labour Market," Queen's Economics Department Working Papers 273683, Queen's University - Department of Economics.
    • Handle: RePEc:ags:quedwp:273683
    DOI: 10.22004/ag.econ.273683
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/273683/files/qed_wp_1197.pdf
    Download Restriction: no
    File URL: https://libkey.io/10.22004/ag.econ.273683?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. René Böheim & Mark P. Taylor, 2002. "Tied Down Or Room To Move? Investigating The Relationships Between Housing Tenure, Employment Status And Residential Mobility In Britain," Scottish Journal of Political Economy, Scottish Economic Society, vol. 49(4), pages 369-392, September.
    2. Gervais, Martin, 2002. "Housing taxation and capital accumulation," Journal of Monetary Economics, Elsevier, vol. 49(7), pages 1461-1489, October.
    3. Richard K. Green & Patric H. Hendershott, 2001. "Home-ownership and Unemployment in the US," Urban Studies, Urban Studies Journal Limited, vol. 38(9), pages 1509-1520, August.
    4. Topel, Robert H & Rosen, Sherwin, 1988. "Housing Investment in the United States," Journal of Political Economy, University of Chicago Press, vol. 96(4), pages 718-740, August.
    5. Wheaton, William C, 1990. "Vacancy, Search, and Prices in a Housing Market Matching Model," Journal of Political Economy, University of Chicago Press, vol. 98(6), pages 1270-1292, December.
    6. Michiel van Leuvensteijn & Pierre Koning, 2006. "The Effect of Home-Ownership on Labour Mobility in the Netherlands," Chapters, in: Julián Messina & Claudio Michelacci & Jarkko Turunen & Gylfi Zoega (ed.), Labour Market Adjustments in Europe, chapter 6, Edward Elgar Publishing.
    7. Steven D. Levitt & Chad Syverson, 2008. "Market Distortions When Agents Are Better Informed: The Value of Information in Real Estate Transactions," The Review of Economics and Statistics, MIT Press, vol. 90(4), pages 599-611, November.
    8. Overman, Henry G. & Ioannides, Yannis M., 2001. "Cross-Sectional Evolution of the U.S. City Size Distribution," Journal of Urban Economics, Elsevier, vol. 49(3), pages 543-566, May.
    9. François Ortalo-Magné & Sven Rady, 2006. "Housing Market Dynamics: On the Contribution of Income Shocks and Credit Constraints ," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 73(2), pages 459-485.
    10. DiPasquale, Denise & Glaeser, Edward L., 1999. "Incentives and Social Capital: Are Homeowners Better Citizens?," Journal of Urban Economics, Elsevier, vol. 45(2), pages 354-384, March.
    11. Jaakko Pehkonen, 1999. "Unemployment and home-ownership," Applied Economics Letters, Taylor & Francis Journals, vol. 6(5), pages 263-265.
    12. Antonia Díaz & Belén Jerez, 2013. "House Prices, Sales, And Time On The Market: A Search‐Theoretic Framework," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 54(3), pages 837-872, August.
    13. Stijn Van Nieuwerburgh & Pierre-Olivier Weill, 2010. "Why Has House Price Dispersion Gone Up?," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 77(4), pages 1567-1606.
    14. Campbell, Sean D. & Davis, Morris A. & Gallin, Joshua & Martin, Robert F., 2009. "What moves housing markets: A variance decomposition of the rent-price ratio," Journal of Urban Economics, Elsevier, vol. 66(2), pages 90-102, September.
    15. Carole Brunet & Jean-Yves Lesueur, 2009. "Do Homeowners Stay Unemployed Longer ? Evidence based on French Data," Post-Print halshs-00957884, HAL.
    16. Paul Flatau & Matt Forbes & Patric H. Hendershott, 2003. "Homeownership and Unemployment: The Roles of Leverage and Public Housing," NBER Working Papers 10021, National Bureau of Economic Research, Inc.
    17. Jonathan Halket, 2009. "Home Ownership, Savings and Mobility Over The Life Cycle," 2009 Meeting Papers 295, Society for Economic Dynamics.
    18. Robert Shimer, 2005. "The Cyclical Behavior of Equilibrium Unemployment and Vacancies," American Economic Review, American Economic Association, vol. 95(1), pages 25-49, March.
    19. repec:bla:scotjp:v:49:y:2002:i:4:p:369-92 is not listed on IDEAS
    20. Jakob Roland Munch & Michael Rosholm & Michael Svarer, 2006. "Are Homeowners Really More Unemployed?," Economic Journal, Royal Economic Society, vol. 116(514), pages 991-1013, October.
    21. Coulson, N. Edward & Fisher, Lynn M., 2009. "Housing tenure and labor market impacts: The search goes on," Journal of Urban Economics, Elsevier, vol. 65(3), pages 252-264, May.
    22. Rupert, Peter & Wasmer, Etienne, 2012. "Housing and the labor market: Time to move and aggregate unemployment," Journal of Monetary Economics, Elsevier, vol. 59(1), pages 24-36.
    23. François Ortalo-Magné & Andrea Prat, 2016. "Spatial Asset Pricing: A First Step," Economica, London School of Economics and Political Science, vol. 83(329), pages 130-171, January.
    24. Munch, Jakob Roland & Rosholm, Michael & Svarer, Michael, 2008. "Home ownership, job duration, and wages," Journal of Urban Economics, Elsevier, vol. 63(1), pages 130-145, January.
    25. Morris A. Davis, 2010. "housing and the business cycle," The New Palgrave Dictionary of Economics,, Palgrave Macmillan.
    26. Nickell, Stephen, 1998. "Unemployment: Questions and Some Answers," Economic Journal, Royal Economic Society, vol. 108(448), pages 802-816, May.
    27. Dohmen, Thomas J., 2005. "Housing, mobility and unemployment," Regional Science and Urban Economics, Elsevier, vol. 35(3), pages 305-325, May.
    28. Edward L. Glaeser & Erzo F. P. Luttmer, 2003. "The Misallocation of Housing Under Rent Control," American Economic Review, American Economic Association, vol. 93(4), pages 1027-1046, September.
    29. James Albrecht & Axel Anderson & Eric Smith & Susan Vroman, 2007. "Opportunistic Matching In The Housing Market," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 48(2), pages 641-664, May.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Guler, Bulent & Taskin, Ahmet Ali, 2018. "Homeownership and unemployment: The effect of market size," Labour Economics, Elsevier, vol. 54(C), pages 191-209.
    2. Daan Isebaert & Freddy Heylen & Carine Smolders, 2015. "Houses and/or Jobs: Ownership and the Labour Market in Belgian Districts," Regional Studies, Taylor & Francis Journals, vol. 49(8), pages 1387-1406, August.
    3. Yang, Xi, 2019. "The effects of home ownership on post-unemployment wages," Regional Science and Urban Economics, Elsevier, vol. 74(C), pages 1-17.
    4. Ch.-M. CHEVALIER & R. LARDEUX, 2017. "Homeownership and labor market outcomes: disentangling externality and composition effects," Documents de Travail de l'Insee - INSEE Working Papers g2017-09, Institut National de la Statistique et des Etudes Economiques.
    5. Rodríguez Hernández, José E. & Barrios García, Javier A., 2012. "¿Incide la forma de tenencia de la vivienda habitual sobre la situación de empleo en España?/Does the Housing Tenure Choice Affect the Employment Situation in Spain?," Estudios de Economia Aplicada, Estudios de Economia Aplicada, vol. 30, pages 751(22)-751, Agosto.
    6. Broulíková, Hana M. & Huber, Peter & Montag, Josef & Sunega, Petr, 2020. "Homeownership, mobility, and unemployment: Evidence from housing privatization," Journal of Housing Economics, Elsevier, vol. 50(C).
    7. Davis, Morris A. & Van Nieuwerburgh, Stijn, 2015. "Housing, Finance, and the Macroeconomy," 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 753-811, Elsevier.
    8. Gaetano Lisi, 2016. "Mortgage Market, Housing Tenure Choice and Unemployment," The Journal of Real Estate Finance and Economics, Springer, vol. 53(4), pages 472-493, November.
    9. Vives Coscojuela, Cecilia, 2015. "Geographical mobility and the labour market," IKERLANAK 15485, Universidad del País Vasco - Departamento de Fundamentos del Análisis Económico I.
    10. Laamanen, Jani-Petri, 2017. "Home-ownership and the Labour Market: Evidence from Rental Housing Market Deregulation," Labour Economics, Elsevier, vol. 48(C), pages 157-167.
    11. Engelhardt, Gary V. & Eriksen, Michael D. & Gale, William G. & Mills, Gregory B., 2010. "What are the social benefits of homeownership? Experimental evidence for low-income households," Journal of Urban Economics, Elsevier, vol. 67(3), pages 249-258, May.
    12. Andrea Morescalchi, 2016. "The Puzzle Of Job Search And Housing Tenure: A Reconciliation Of Theory And Empirical Evidence," Journal of Regional Science, Wiley Blackwell, vol. 56(2), pages 288-312, March.
    13. Bouyon, Sylvain, 2015. "Home ownership, labour markets and the economic crisis," ECRI Papers 10690, Centre for European Policy Studies.
    14. Caliendo, Marco & Gielen, Anne C. & Mahlstedt, Robert, 2015. "Home-ownership, unemployed’s job search behavior and post-unemployment outcomes," Economics Letters, Elsevier, vol. 137(C), pages 218-221.
    15. Vives Coscojuela, Cecilia, 2018. "Housing Tenure, Geographical Mobility and the Labour Market: the Role of the Employment Exit Rate," IKERLANAK 30207, Universidad del País Vasco - Departamento de Fundamentos del Análisis Económico I.
    16. Coulson, N. Edward & Fisher, Lynn M., 2009. "Housing tenure and labor market impacts: The search goes on," Journal of Urban Economics, Elsevier, vol. 65(3), pages 252-264, May.
    17. 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.
    18. Hilber, Christian A.L. & Lyytikäinen, Teemu, 2017. "Transfer taxes and household mobility: Distortion on the housing or labor market?," Journal of Urban Economics, Elsevier, vol. 101(C), pages 57-73.
    19. Christian A. L. Hilber & Teemu Lyytikäinen, 2012. "The Effect of the UK Stamp Duty Land Tax on Household Mobility," SERC Discussion Papers 0115, Centre for Economic Performance, LSE.
    20. Timo Tohmo & Jutta Viinikainen, 2023. "Home-ownership and unemployment: revisiting the Oswald hypothesis from a regional heterogeneity perspective," Economics and Business Letters, Oviedo University Press, vol. 12(4), pages 342-355.

    More about this item

    Keywords

    ;
    ;

    JEL classification:

    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:quedwp:273683. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: AgEcon Search (email available below). General contact details of provider: https://edirc.repec.org/data/qedquca.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.