Labor outcomes of mortgage payment subsidies for unemployed homeowners

Stephanie Casey Pierce, Julia K. Brown, Stephanie Moulton and Yung Chun

Journal of Housing Economics, 2025, vol. 67, issue C

Abstract: Policy interventions often target negative shocks to employment or housing as independent events. For instance, unemployment benefits aim to make up for lost earnings while mortgage assistance programs aim to prevent foreclosures. Yet, research suggests that housing markets and labor markets are systematically correlated. In this paper, we test the extent to which temporary mortgage payment relief improves long-term labor outcomes. We use data on unemployed homeowners who sought assistance through the U.S. Department of Treasury's Hardest Hit Fund program in Ohio, which subsidized the mortgage payment for unemployed homeowners for up to 18 months while they searched for a job. Through event study difference-in-differences models with individual fixed effects, we find that the receipt of mortgage payment subsidies extends the duration of unemployment in the short term but results in significantly higher earnings and a higher probability of being employed over the long term. These positive long-term findings, however, are only observed when mortgage payment relief is provided shortly after the onset of the unemployment shock. This highlights the importance of timely intervention to not only prevent foreclosures but also to improve labor market outcomes for homeowners experiencing an income shock.

Keywords: Mortgage; Housing subsidies; Unemployment; Foreclosure; Forbearance; Labor market behavior (search for similar items in EconPapers)
JEL-codes: J68 R31 (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S1051137724000597
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:jhouse:v:67:y:2025:i:c:s1051137724000597

DOI: 10.1016/j.jhe.2024.102040

Access Statistics for this article

Journal of Housing Economics is currently edited by H. O. Pollakowski

More articles in Journal of Housing Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().