The Persistent Employment E ffects of the 2006-09 U.S. Housing Wealth Collapse

Saroj Bhattarai, Choongryul Yang and Felipe Schwartzman

No 671, 2019 Meeting Papers from Society for Economic Dynamics

Abstract: We show that the housing wealth collapse of 2006-09 had a persistent impact on employment across US counties. In particular, localities that had a larger loss in housing net-worth during that period had more depressed employment as late as 2016, without a commensurate population response. Using IV's and controls to identify the causal impact of the wealth shock amplify those results, leading to an estimate that a 10 percent change in housing net-worth between 2006 and 2009 causes a 4.5 percent decline in local employment by 2016, as compared to a 2006 baseline. We do not find long-term causal impact of the shock on wages. Sectoral results indicate, however, that the results are unlikely to be purely a result of persistently low demand, since, contrary to the short-run effects, the effect over the longer horizon is less concentrated in the non-tradables sectors and is instead more prominent in the high-skilled services sector.

Date: 2019
New Economics Papers: this item is included in nep-ure
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Working Paper: The Persistent Employment Effects of the 2006-09 U.S. Housing Wealth Collapse (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:red:sed019:671

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