IDEAS home Printed from https://ideas.repec.org/p/crb/wpaper/2017-05.html
   My bibliography  Save this paper

Does promoting homeownership always damage labour market performances?

Author

Listed:
  • Julie Beugnot

    () (Université Bourgogne Franche-Comté, CRESE)

  • Guy Lacroix

    () (Université Laval, CRREP, CIRANO)

  • Olivier Charlot

    () (Université de Cergy Ponthoise, THEMA)

Abstract

In this paper we analyze the link between homeownership and various aggregate and individual labour market outcomes. Our aim is to investigate the likely consequences of public policies that promote homeownership. To this end, we develop a circular firm-worker matching model with Nash wage bargaining and free market entry. Homeowners are assumed to be less mobile than tenants due to higher mobility costs mainly induced by housing market frictions. Through extensive numerical simulations, we show that: (1) Higher homeownership rates need not lead to higher unemployment rates, contrary to the so-called Oswald's hypothesis, but depends crucially on the importance of mobility costs mainly driven by housing market regulation; (2) while increased homeownership may prove harmful to some macroeconomic labour market indicators, it is always beneficial to individuals' labour market performances.

Suggested Citation

  • Julie Beugnot & Guy Lacroix & Olivier Charlot, 2017. "Does promoting homeownership always damage labour market performances?," Working Papers 2017-05, CRESE.
  • Handle: RePEc:crb:wpaper:2017-05
    as

    Download full text from publisher

    File URL: https://crese.univ-fcomte.fr/uploads/wp/WP-2017-05.pdf
    File Function: First version, 2017
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    as
    1. Christopher A. Pissarides, 2000. "Equilibrium Unemployment Theory, 2nd Edition," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262161877, December.
    2. David G. Blanchflower & Andrew J. Oswald, 2013. "Does High Home-Ownership Impair the Labor Market?," NBER Working Papers 19079, National Bureau of Economic Research, Inc.
    3. Belot, Michele & van Ours, Jan C., 2001. "Unemployment and Labor Market Institutions: An Empirical Analysis," Journal of the Japanese and International Economies, Elsevier, vol. 15(4), pages 403-418, December.
    4. Stijn Baert & Freddy Heylen & Daan Isebaert, 2014. "Does Homeownership Lead to Longer Unemployment Spells? The Role of Mortgage Payments," De Economist, Springer, vol. 162(3), pages 263-286, September.
    5. Oswald, Andrew J., 1996. "A Conjecture on the Explanation for High Unemployment in the Industrialized Nations: Part I," Economic Research Papers 268744, University of Warwick - Department of Economics.
    6. Allen Head & Huw Lloyd-Ellis, 2012. "Housing Liquidity, Mobility, and the Labour Market," Review of Economic Studies, Oxford University Press, vol. 79(4), pages 1559-1589.
    7. 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.
    8. 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.
    9. Christopher A. Pissarides & Barbara Petrongolo, 2001. "Looking into the Black Box: A Survey of the Matching Function," Journal of Economic Literature, American Economic Association, vol. 39(2), pages 390-431, June.
    10. 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.
    11. Smith, Lawrence B & Rosen, Kenneth T & Fallis, George, 1988. "Recent Developments in Economic Models of Housing Markets," Journal of Economic Literature, American Economic Association, vol. 26(1), pages 29-64, March.
    12. Dietz, Robert D. & Haurin, Donald R., 2003. "The social and private micro-level consequences of homeownership," Journal of Urban Economics, Elsevier, vol. 54(3), pages 401-450, November.
    13. Aico van Vuuren & Michiel van Leuvensteijn, 2007. "The impact of homeownership on unemployment in the Netherlands," CPB Discussion Paper 86, CPB Netherlands Bureau for Economic Policy Analysis.
    14. Nathalie Havet & Alexis Penot, 2010. "Does Homeownership Harm Labour Market Performances? A Survey," Working Papers 1012, Groupe d'Analyse et de Théorie Economique Lyon St-Étienne (GATE Lyon St-Étienne), Université de Lyon.
    15. Henley, Andrew, 1998. "Residential Mobility, Housing Equity and the Labour Market," Economic Journal, Royal Economic Society, vol. 108(447), pages 414-427, March.
    16. Dan Andrews & Aida Caldera Sánchez, 2011. "The Evolution of Homeownership Rates in Selected OECD Countries: Demographic and Public Policy Influences," OECD Journal: Economic Studies, OECD Publishing, vol. 2011(1), pages 1-37.
    17. Dohmen, Thomas J., 2005. "Housing, mobility and unemployment," Regional Science and Urban Economics, Elsevier, vol. 35(3), pages 305-325, May.
    18. Steven C. Salop, 1979. "Monopolistic Competition with Outside Goods," Bell Journal of Economics, The RAND Corporation, vol. 10(1), pages 141-156, Spring.
    19. 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.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Coda Moscarola, Flavia & Colombino, Ugo & Figari, Francesco & Locatelli, Marilena, 2020. "Shifting taxes away from labour enhances equity and fiscal efficiency," Journal of Policy Modeling, Elsevier, vol. 42(2), pages 367-384.
    2. Thierry Kamionka & Guy Lacroix, 2018. "Homeownership, Labour Market Transitions and Earnings," CIRANO Working Papers 2018s-35, CIRANO.

    More about this item

    Keywords

    Stochastic job matching; Homeownership; Unemployment; Mobility;

    JEL classification:

    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
    • 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

    NEP fields

    This paper has been announced in the following NEP Reports:

    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:crb:wpaper:2017-05. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Thomas Chuffart). General contact details of provider: http://edirc.repec.org/data/crufcfr.html .

    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 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.

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

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.