The scarring of the Great Recession on construction labor and housing supply

Thao Le

Real Estate Economics, 2025, vol. 53, issue 3, 543-573

Abstract: This study examines the long‐term impact of the Great Recession on employment in residential construction, and consequently housing supply. Using regional variation in house price declines during 2006–2009, I find that more severely impacted areas experienced a persistent reduction in construction employment but higher wage growth postrecession, consistent with a downward shift in construction labor supply. This contraction has a causal negative effect on housing production output. A 10% decrease in house prices during the crisis induced a 17%–20% reduction in 2019 construction employment, which in turn led to a 3.0%–5.7% decline in housing construction.

Date: 2025
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https://doi.org/10.1111/1540-6229.12526

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Persistent link: https://EconPapers.repec.org/RePEc:bla:reesec:v:53:y:2025:i:3:p:543-573

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