Home Equity and Labor Income: The Role of Constrained Mobility
Radhakrishnan Gopalan,
Barton H Hamilton,
Ankit Kalda,
David Sovich and
Holger Mueller
The Review of Financial Studies, 2021, vol. 34, issue 10, 4619-4662
Abstract:
Using detailed data for U.S. homeowners, we document a negative, nonlinear relation between the loan-to-value ratio (LTV) of homeowners’ primary residence and their labor income. Consistent with high LTV individuals experiencing constrained mobility, we find stronger effects among subprime, liquidity- constrained individuals and those living in regions with limited alternative local employment opportunities and strict noncompete law enforcement. Though high LTV individuals are less likely to move across MSAs, they are more likely to change jobs without changing their residence. We find no effects among similar neighboring renters employed at the same firm and with a similar job tenure.
JEL-codes: D10 G21 J30 J61 J62 R20 (search for similar items in EconPapers)
Date: 2021
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