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House prices wealth effect and labor supply

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  • Richard Disney
  • John Gathergood

Abstract

We examine the impact of housing wealth on labor supply decisions using data on exogenous local variation in house prices merged into household panel data for Britain. Our estimates are conditioned on variations in local labor demand and income expectations as these may co-determine housing wealth and labor supply. We use renters as a control group and test for the potential endogeneity of tenure and location. We find significant housing wealth effects on labor supply among young married / co-habiting female owners and older male owners, consistent with leisure being a normal good. The size of these effects is economically important. Our estimates imply housing wealth effects have stronger effects then local labor market conditions upon participation decisions for these workers.

Suggested Citation

  • Richard Disney & John Gathergood, 2015. "House prices wealth effect and labor supply," Discussion Papers 2015/19, University of Nottingham, Centre for Finance, Credit and Macroeconomics (CFCM).
  • Handle: RePEc:not:notcfc:15/19
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    File URL: http://www.nottingham.ac.uk/cfcm/documents/papers/cfcm-2015-19.pdf
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    References listed on IDEAS

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    Cited by:

    1. Costa-Font, Joan & Frank, Richard & Swartz, Katherine, 2017. "Access to long-term care after a wealth shock: evidence from the housing bubble and burst," LSE Research Online Documents on Economics 84212, London School of Economics and Political Science, LSE Library.
    2. repec:eee:socmed:v:192:y:2017:i:c:p:36-48 is not listed on IDEAS
    3. François Geerolf & Thomas Grjebine, 2014. "Assessing House Price Effects on Unemployment Dynamics," Working Papers 2014-25, CEPII research center.

    More about this item

    Keywords

    Labor supply; Wealth effects; House prices;

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

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