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Moving to a new job: the role of home equity, debt, and access to credit

Yuliya Demyanyk (), Dmytro Hryshko (), Maria Luengo-Prado () and Bent Sorensen
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Dmytro Hryshko: University of Alberta

No 16-1, Working Papers from Federal Reserve Bank of Boston

Abstract: The severe decline in house prices during and after the Great Recession may have hampered adjustment in U.S. labor markets by limiting mobility of unemployed workers. Mobility will suffer if unemployed workers are reluctant to leave homes that, with debt exceeding value, cannot be disposed of without injecting cash or defaulting—a pattern referred to as "housing lock-in." If such reluctance keeps workers from moving from depressed areas to areas with available jobs, the Beveridge curve, which depicts the relationship between vacancies and joblessness, may shift outward. To examine whether this has been the case in the United States in recent years, the authors use individual-level credit reports merged with loan-level mortgage data to estimate how mobility relates to home equity when labor markets are weak or strong, and they develop and calibrate a dynamic quantitative model of consumption, housing, employment, and mobility that replicates the data well.

JEL-codes: E21 J61 R23 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-mac and nep-ure
Date: 2016-01-25
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