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Does homeownership lead to longer unemployment spells? The role of mortgage payments

Listed author(s):
  • S. BAERT

    ()

  • F. HEYLEN

    ()

  • D. ISEBAERT

    ()

This paper examines the impact of housing tenure choice on unemployment duration in Belgium using EU-SILC micro data. We contribute to the literature in distinguishing homeowners with mortgage payments and outright homeowners. We simultaneously estimate unemployment duration by a mixed proportional hazard model, and the probability of being an outright homeowner, a homeowner with mortgage payments or a tenant by a mixed multinomial logit model. To be able to correctly identify the causal influence of different types of housing tenure on unemployment duration, we use instrumental variables. Our results show that homeowners with a mortgage exit unemployment first. Outright owners stay unemployed the longest. Tenants take an intermediate position. Moreover, our results reveal the different share of mortgage holders within the group of homeowners as a possible explanation for the discrepancy between former contributions to this literature.

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File URL: http://wps-feb.ugent.be/Papers/wp_13_858.pdf
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Paper provided by Ghent University, Faculty of Economics and Business Administration in its series Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium with number 13/858.

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Length: 27 pages
Date of creation: Oct 2013
Handle: RePEc:rug:rugwps:13/858
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Hoveniersberg 4, B-9000 Gent

Phone: ++ 32 (0) 9 264 34 61
Fax: ++ 32 (0) 9 264 35 92
Web page: http://www.ugent.be/eb

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