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House prices, wealth effects and labour supply

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  • Disney, Richard
  • Gathergood, John

Abstract

We examine the impact of house prices on labour supply decisions using UK micro data. We combine household survey data with local level house price measures and controls for local labour demand. Our micro data also allows us to control for individual level income expectations. We find significant house price effects on labour supply, consistent with leisure being a normal good. Labour supply responses to house prices are concentrated among young married female owners and older owners. This finding suggests house prices affect the decisions of marginal workers in the economy. Our estimates imply house prices are economically important for the participation decisions for these workers.

Suggested Citation

  • Disney, Richard & Gathergood, John, 2016. "House prices, wealth effects and labour supply," CFS Working Paper Series 556, Center for Financial Studies (CFS).
  • Handle: RePEc:zbw:cfswop:556
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    1. Increasing House Values Playing Significant Role in Wealth Recovery
      by ? in St. Louis Fed On the Economy on 2014-06-30 15:00:06

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    Cited by:

    1. Zhechun He, 2015. "Estimating the Impact of House Prices on Household Labour Supply in the UK," Discussion Papers 15/19, Department of Economics, University of York.
    2. Fu, Shihe & Liao, Yu & Zhang, Junfu, 2016. "The effect of housing wealth on labor force participation: Evidence from China," Journal of Housing Economics, Elsevier, vol. 33(C), pages 59-69.
    3. Renata Bottazzi & Serena Trucchi & Matthew Wakefield, 2021. "Labour supply responses to financial wealth shocks: evidence from Italy," Fiscal Studies, John Wiley & Sons, vol. 42(2), pages 291-317, June.
    4. Begley, Jaclene & Chan, Sewin, 2018. "The effect of housing wealth shocks on work and retirement decisions," Regional Science and Urban Economics, Elsevier, vol. 73(C), pages 180-195.
    5. Costa-Font, Joan & Frank, Richard G. & Swartz, Katherine, 2019. "Access to long term care after a wealth shock: Evidence from the housing bubble and burst," The Journal of the Economics of Ageing, Elsevier, vol. 13(C), pages 103-110.
    6. Jianmei Zhao & Lin Liu & Ruihan Liu, 2018. "How house price appreciation affects homeowners' labour force participation : Evidence from urban China," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 26(2), pages 233-252, April.
    7. Teodora Cristina Barbu & Mariana Vu?a & Adina Ionela Strachinaru & Sorin Iulian Cioaca, 2017. "An Assessment of the Immigration Impact on the International Housing Price," The AMFITEATRU ECONOMIC journal, Academy of Economic Studies - Bucharest, Romania, vol. 19(46), pages 682-682, August.
    8. Hamulczuk, Mariusz & Makarchuk, Oksana & Sica, Edgardo, 2019. "Searching for market integration: Evidence from Ukrainian and European Union rapeseed markets," Land Use Policy, Elsevier, vol. 87(C).
    9. Daminato, Claudio & Pistaferri, Luigi, 2020. "Family labor supply and asset returns," European Economic Review, Elsevier, vol. 124(C).
    10. Lingxiao Zhao & Gregory Burge, 2021. "Retirement, Unretirement, and Housing Wealth during the Great Recession," The Journal of Real Estate Finance and Economics, Springer, vol. 62(3), pages 342-369, April.
    11. Li, Han & Li, Jiangyi & Lu, Yi & Xie, Huihua, 2020. "Housing wealth and labor supply: Evidence from a regression discontinuity design," Journal of Public Economics, Elsevier, vol. 183(C).
    12. Aquilante, Tommaso & Livio, Luca & Potoms, Tom, 2020. "On-the-job training and intra-family dynamics," Bank of England working papers 873, Bank of England.
    13. Atalay, Kadir & Edwards, Rebecca & Liu, Betty Y.J., 2017. "Effects of house prices on health: New evidence from Australia," Social Science & Medicine, Elsevier, vol. 192(C), pages 36-48.
    14. Chen, Xin & Qin, Yaohua & Xiao, He & Zhang, Yifei, 2019. "Microfinancing and Home-purchase Restrictions: Evidence from the Online “Peer-to-Peer” Lending in China," MPRA Paper 95375, University Library of Munich, Germany.
    15. Sucha Singh, 2020. "Spatio-temporal changes in the patterns of male and female agricultural labour in Punjab: A geographical analysis," Asian Journal of Agriculture and rural Development, Asian Economic and Social Society, vol. 10(1), pages 183-193, June.
    16. Marta Schoch, 2020. "Essays on political economy, inequality and development," Economics PhD Theses 0120, Department of Economics, University of Sussex Business School.
    17. Anil Kumar & Che-Yuan Liang, 2018. "Labor Market Effects of Credit Constraints: Evidence from a Natural Experiment," Working Papers 1810, Federal Reserve Bank of Dallas.
    18. Rong, Yuen & Tian, Cunzhi & Li, Lifang & Zheng, Xinwei, 2020. "Labor hiring and stock return: A model and new evidence from China," Pacific-Basin Finance Journal, Elsevier, vol. 59(C).
    19. François Geerolf & Thomas Grjebine, 2014. "Assessing House Price Effects on Unemployment Dynamics," Working Papers 2014-25, CEPII research center.
    20. Aylit Tina Romm, 2017. "Retirement date effects on saving behavior: Endogenous labor supply and non-separable preferences," International Journal of Economic Theory, The International Society for Economic Theory, vol. 13(3), pages 327-346, September.

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    More about this item

    Keywords

    Labour supply; Wealth effects; House prices;
    All these keywords.

    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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