The impact of homeownership on unemployment in the Netherlands

Aico van Vuuren and Michiel Van Leuvensteijn

No 86, CPB Discussion Paper from CPB Netherlands Bureau for Economic Policy Analysis

Abstract: We analyze the impact of homeownership on unemployment duration using a theoretical model of job search. Earlier studies suggest that this relationship should be positive because workers are less mobile when they own a home. We analyze the impact of homeownership on unemployment duration using a theoretical model of job search. Earlier studies suggest that this relationship should be positive because workers are less mobile when they own a home. Nevertheless, most of the empirical studies in Europe find an opposite relationship. In this paper, we investigate whether this is due to an omission in the original analysis or whether it is due to an endogeneity problem, i.e. those who can leave unemployment easily are more likely to be a homeowner. In our empirical analysis, we use additional information about the differences in unemployment benefits between homeowners and renters. We find that homeowners have higher hazard rates out of unemployment to a job in the local labour market. The impact is significant but not very large. Homeownership has a negative but insignificant impact on the hazard to leave unemployment to the non-local labour market. Finally, we find that homeowners would reduce their probability to receive a job offer from the local labour market when they become renters. The probability to receive a job offer from the non-local labour market would increase for short spells of unemployment when home owners become renters. However, this probability would be reduced for long spells of unemployment.

JEL-codes: J60 J61 R23 (search for similar items in EconPapers)
Date: 2007-08
New Economics Papers: this item is included in nep-eec, nep-geo and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

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Persistent link: https://EconPapers.repec.org/RePEc:cpb:discus:86

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