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The Effect of Homeownership on Geographic Mobility and Labor Market Outcomes

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  • Hernan Winkler

    (UCLA)

Abstract

This paper examines the effect of homeownership on mobility and labor income and provides new evidence that owning a home makes workers less likely to move in response to labor market shocks. To identify this effect, I develop and estimate a structural dynamic model of housing choices, migration decisions and labor market outcomes. I find that owning a home has a large negative effect on the probability of moving in response to a labor market shock and a small negative effect on labor income. Owners suffering from a decrease in home equity are 40 percent less mobile. I conduct two policy experiments. The first shows that the home mortgage deduction has a positive effect on homeownership, affects mobility and creates an incentive to buy larger houses. Second, I find that if the down payment requirement for buying a home is eliminated, homeownership exhibits a large increase, while the mobility and labor income of households experiencing negative labor market shocks decrease.

Suggested Citation

  • Hernan Winkler, 2011. "The Effect of Homeownership on Geographic Mobility and Labor Market Outcomes," 2011 Meeting Papers 196, Society for Economic Dynamics.
    • Handle: RePEc:red:sed011:196
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    File URL: https://economicdynamics.org/meetpapers/2011/paper_196.pdf
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    References listed on IDEAS

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    Cited by:

    1. Siddharth Kothari & Itay Saporta Eksten & Edison Yu, 2013. "The (Un)importance of Geographical Mobility in the Great Recession"," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 16(3), pages 553-563, July.
    2. Florian Oswald, 2015. "Regional Shocks, Migration and Homeownership," Sciences Po publications info:hdl:2441/n1d9kd7k48k, Sciences Po.
    3. Plamen Nemov, 2015. "Regional Reallocation and Housing Markets in a Model of Frictional Migration," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 18(4), pages 863-880, October.
    4. Florian Oswald, 2015. "Regional Shocks, Migration and Homeownership," 2015 Meeting Papers 759, Society for Economic Dynamics.
    5. Bulent Guler, 2013. "Dual Income Couples and Interstate Migration," 2013 Meeting Papers 898, Society for Economic Dynamics.
    6. Kyle F. Herkenhoff & Lee E. Ohanian, 2011. "Labor Market Dysfunction During the Great Recession," NBER Working Papers 17313, National Bureau of Economic Research, Inc.
    7. Bachmann, Rüdiger & Cooper, Daniel, 2014. "The Ins and Arounds in the U.S. Housing Market," CEPR Discussion Papers 10041, C.E.P.R. Discussion Papers.
    8. 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.

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