Home ownership as a labor market friction

Daniel R. Ringo

Real Estate Economics, 2021, vol. 49, issue S1, 111-133

Abstract: This paper estimates the effect of home ownership on individuals' unemployment. Because of higher moving costs, home owners will be less willing than renters to relocate for work and could therefore face longer unemployment spells. Estimation is complicated by the endogeneity of ownership, as owners will have different abilities, preferences, and job prospects than renters. I instrument for home ownership using a preference shifter from the worker's childhood environment. The results indicate that home ownership is a significant hindrance to mobility, and home owners suffer longer unemployment spells because of it.

Date: 2021
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https://doi.org/10.1111/1540-6229.12309

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