Homeownership and entrepreneurship: a search-and-matching model and a panel analysis in Italy

Gaetano Lisi

Economia Politica: Journal of Analytical and Institutional Economics, 2019, vol. 36, issue 3, No 2, 673-694

Abstract: Abstract Housing market rigidities or inefficiencies can damage labour market outcomes and increase unemployment. Also, a related research stream claims that higher homeownership rates are associated with fewer new businesses. Using a search-and-matching model, this theoretical paper investigates the inexplicably neglected relation between homeownership and entrepreneurship by distinguishing two channels through which homeownership affects the creation of enterprises and jobs. The first channel looks at the job search intensity of homeowners, while the second considers the link between the benefit of being a homeowner and the revenues of a new enterprise that is run by the homeowner. The main result of this paper is that the intrinsic preference for homeownership plays a key role in the establishment of new businesses, while in general homeownership does not encourage the development of existing enterprises. Indeed, a panel analysis in Italy confirms the main finding of the search-and-matching model, namely outright homeownership encourages the creation of new small businesses.

Keywords: Entrepreneurship; Search intensity; Intrinsic preference for homeownership; Outright homeownership; Homeownership with mortgage payments; Job creation; New firms; Small businesses (search for similar items in EconPapers)
JEL-codes: J63 J64 L26 M13 R21 (search for similar items in EconPapers)
Date: 2019
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DOI: 10.1007/s40888-017-0073-3

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