Moving “away" from Opportunities?: Homeownership and Employment

Pablo Navarrete and Nicolás Navarrete

No 956, Research Department working papers from CAF Development Bank Of Latinamerica

Abstract: Homeownership is promoted by the majority of OECD member countries. Nevertheless, the impact that owning a house can have on employment levels is not fully understood. In this paper, we estimate the causal effect of homeownership on employment using a regression discontinuity design that exploits an arbitrary threshold arising from a voucher-based homeownership program in Chile. We establish that homeownership decreases employment by between 3.85 and 5.33 percentage points. These results contrast with previous nonexperimental literature, which has often found a positive effect of homeownership on labor market outcomes. Our findings are primarily the result of individuals not entering the labor market, rather than workers being motivated to leave their job. We also find that families receiving a house through this program are neither more nor less likely to move to another labor market, contrary to what was proposed by previous theoretical papers. A likely mechanism driving the effect is that families moving into their own house under this program tend to see an increase in their monthly unearned income and in their housework obligations, which raises the minimum wage for which they are willing to work.

Keywords: Investigación socioeconómica; Trabajo y protección social; Vivienda (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:dbl:dblwop:956

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