Does High Home-Ownership Impair the Labor Market?

David Blanchflower and Andrew Oswald

No WP13-3, Working Paper Series from Peterson Institute for International Economics

Abstract: The authors explore the hypothesis that high home-ownership damages the labor market. The results are relevant to, and may be worrying for, a range of policymakers and researchers. The authors find that rises in the home-ownership rate in a US state are a precursor to eventual sharp rises in unemployment in that state. The elasticity exceeds unity: A doubling of the rate of home-ownership in a US state is followed in the long-run by more than a doubling of the later unemployment rate. What mechanism might explain this? The authors show that rises in home-ownership lead to three problems: (i) lower levels of labor mobility, (ii) greater commuting times, and (iii) fewer new businesses. The argument is not that owners themselves are disproportionately unemployed. Evidence suggests, instead, that the housing market can produce negative 'externalities' upon the labor market. The time lags are long. That gradualness may explain why these important patterns are so little-known.

Keywords: Natural rate of unemployment; labor market; housing market; structural; business cycles; mobility (search for similar items in EconPapers)
JEL-codes: I1 I3 (search for similar items in EconPapers)
Date: 2013-05
New Economics Papers: this item is included in nep-lab, nep-ltv and nep-ure
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Citations: View citations in EconPapers (93)

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Related works:
Working Paper: Does High Home-Ownership Impair the Labor Market? (2013)
Working Paper: Does High Home-Ownership Impair the Labor Market? (2013)
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