Economic precariousness: A new channel in the housing market cycle

Philip Arestis and Ana Rosa Gonzalez‐Martinez

International Journal of Finance & Economics, 2019, vol. 24, issue 2, 1030-1043

Abstract: Demographic and institutional elements, as important drivers of the housing market, should not be neglected because it is not only financial and monetary elements that matter in the case of the housing market. In this context, one relationship, which still remains unclear, is the relationship between the housing and the labour markets. Some research has been undertaken to support the hypothesis that high rates of homeownership lead to high unemployment via increases in the reservation wage. However, further research is needed to address the possible implications of the institutional settings of the labour market in the dynamics of the housing market. The aim of this paper is to bring some light on the link between both markets. In particular, this contribution explains how the housing cycle could be “amplified” via a new channel, that is, economic precariousness, which is closely related to job insecurity. Subsequently, we provide evidence in the case of five developed economies, Ireland, the Netherlands, Spain, the United Kingdom, and the United States, over the period 1985–2013.

Date: 2019
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https://doi.org/10.1002/ijfe.1716

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Working Paper: Economic precariousness: A new channel in the housing market cycle (2017)
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