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

  • 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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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
Date of revision:
Handle: RePEc:rug:rugwps:13/858
Contact details of provider: Postal: 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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  1. Jakob Roland Munch & Michael Rosholm & Michael Svarer, 2006. "Home Ownership, Job Duration, and Wages," CAM Working Papers 2006-08, University of Copenhagen. Department of Economics. Centre for Applied Microeconometrics.
  2. Jan Rouwendal & Peter Nijkamp, 2007. "Homeownership and Labour Market Behaviour: Interpreting the Evidence," Tinbergen Institute Discussion Papers 07-047/3, Tinbergen Institute, revised 03 Nov 2008.
  3. Casper Ewijk & Bas Jacobs & Ruud Mooij, 2007. "Welfare Effects of Fiscal Subsidies on Home Ownership in the Netherlands," De Economist, Springer, vol. 155(3), pages 323-336, September.
  4. Michiel van Leuvensteijn & Pierre Koning, 2006. "The Effect of Home-Ownership on Labour Mobility in the Netherlands," Chapters, in: Labour Market Adjustments in Europe, chapter 6 Edward Elgar.
  5. Hughes, Gordon & McCormick, Barry & McCormick, Barry, 1987. "Housing markets, unemployment and labour market flexibility in the UK," European Economic Review, Elsevier, vol. 31(3), pages 615-641, April.
  6. Gerard J. van den Berg & Anders Holm & Jan C. van Ours, 2002. "Do stepping-stone jobs exist? Early career paths in the medical profession," Journal of Population Economics, Springer, vol. 15(4), pages 647-665.
  7. Michael Svarer & Michael Rosholm & Jacob Roland Munch, 2003. "Are Home Owners Really more Unemployed?," CAM Working Papers 2003-09, University of Copenhagen. Department of Economics. Centre for Applied Microeconometrics.
  8. Bloemen, Hans G & Stancanelli, Elena G F, 2001. "Individual Wealth, Reservation Wages, and Transitions into Employment," Journal of Labor Economics, University of Chicago Press, vol. 19(2), pages 400-439, April.
  9. Rendon Sílvio, 2006. "Job Search And Asset Accumulation Under Borrowing Constraints ," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 47(1), pages 233-263, 02.
  10. D. Isebaert & F. Heylen & C. Smolders, 2010. "Houses and/or jobs: ownership and the labour market in Belgian districts," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 10/695, Ghent University, Faculty of Economics and Business Administration.
  11. Ernest P. Goss & Joseph M. Phillips, 1997. "The Impact of Home Ownership on the Duration of Unemployment," The Review of Regional Studies, Southern Regional Science Association, vol. 27(1), pages 9-27, Summer.
  12. Kiefer, Nicholas M, 1988. "Economic Duration Data and Hazard Functions," Journal of Economic Literature, American Economic Association, vol. 26(2), pages 646-79, June.
  13. 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.
  14. Gaure, Simen & Røed, Knut & Zhang, Tao, 2005. "Time and Causality: A Monte Carlo Assessment of the Timing-of-Events Approach," Memorandum 19/2005, Oslo University, Department of Economics.
  15. Casper van Ewijk & Michiel van Leuvensteijn, 2009. "Homeownership and the labour market in Europe," CPB Special Publication 79, CPB Netherlands Bureau for Economic Policy Analysis.
  16. Thomas De Graaff & Michiel Van Leuvensteijn, 2013. "A European Cross-Country Comparison of the Impact of Homeownership and Transaction Costs on Job Tenure," Regional Studies, Taylor & Francis Journals, vol. 47(9), pages 1443-1461, October.
  17. Heckman, James & Singer, Burton, 1984. "A Method for Minimizing the Impact of Distributional Assumptions in Econometric Models for Duration Data," Econometrica, Econometric Society, vol. 52(2), pages 271-320, March.
  18. Blanchflower, David G. & Oswald, Andrew J., 2013. "Does High Home-Ownership Impair the Labor Market?," IZA Discussion Papers 7640, Institute for the Study of Labor (IZA).
  19. repec:spo:wpecon:info:hdl:2441/9704 is not listed on IDEAS
  20. Aida Caldera Sánchez & Dan Andrews, 2011. "Residential Mobility and Public Policy in OECD Countries," OECD Journal: Economic Studies, OECD Publishing, vol. 2011(1), pages 1-22.
  21. Harminder Battu & Ada Ma & Euan Phimister, 2008. "Housing Tenure, Job Mobility and Unemployment in the UK," Economic Journal, Royal Economic Society, vol. 118(527), pages 311-328, 03.
  22. Moriizumi, Yoko & Naoi, Michio, 2011. "Unemployment risk and the timing of homeownership in Japan," Regional Science and Urban Economics, Elsevier, vol. 41(3), pages 227-235, May.
  23. D. Isebaert, 2013. "Housing Tenure and Geographical Mobility in Belgium," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 13/855, Ghent University, Faculty of Economics and Business Administration.
  24. Hughes, Gordon & McCormick, Barry, 1981. "Do Council Housing Policies Reduce Migration between Regions?," Economic Journal, Royal Economic Society, vol. 91(364), pages 919-37, December.
  25. Boheim, Rene & Taylor, Mark P, 2002. "Tied Down or Rome 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 369-92, September.
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