Housing Liquidity, Mobility, And The Labour Market

Allen Head () and Huw Lloyd-Ellis

No 1197, Working Paper from Economics Department, Queen's University

Abstract: We study the interactions among geographical mobility, unemployment and home-ownership in an economy with heterogeneous locations, endogenous construction and search frictions in the markets for both labour and housing. The decision of home-owners to accept job offers from other cities depends on how quickly they can sell their houses (i.e. their liquidity), which in turn depends on local labour market conditions. Consequently, home-owners accept job offers from other cities at a lower rate than do renters, generating a link between home-ownership and aggregate unemployment. When calibrated to match aggregate U.S. statistics on mobility, housing and labour flows, our model predicts that the effect of home-ownership on aggregate unemployment is small. When unemployment is high, however, changes in the rate of home-ownership can have economically significant effects.

Keywords: liquidity; mobility; home-ownership; unemployment (search for similar items in EconPapers)
JEL-codes: J61 J64 R23 (search for similar items in EconPapers)
Pages: 63 pages
Date: 2011-08
New Economics Papers: this item is included in nep-dge, nep-geo, nep-lab, nep-mig and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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https://www.econ.queensu.ca/sites/econ.queensu.ca/files/qed_wp_1197.pdf First version 2011 (application/pdf)

Related works:
Journal Article: Housing Liquidity, Mobility, and the Labour Market (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:qed:wpaper:1197

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