Homeownership, Unemployment and Commuting Distances

Yuval Kantor, Peter Nijkamp and Jan Rouwendal
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Yuval Kantor: VU University Amsterdam

No 13-144/VIII, Tinbergen Institute Discussion Papers from Tinbergen Institute

Abstract: More than a decade ago Oswald has formulated the thesis that homeownership increases unemployment. Empirical research on micro data has confirmed that unemployed homeowners are less inclined to move house in combination with accepting a new job elsewhere. However, in general for European countries, residential mobility associated with unemployment spells appears to be too small to be able to have a substantial impact on labour market outcomes. The present paper aims to make a new contribution to the scientific debate on Oswald’s thesis by addressing two complementary issues: risk attitudes of job seekers and commuting costs. We show that decreasing absolute risk aversion implies that the exit rate from unemployment is increasing in housing cost in the context of a standard job search model. In a spatial setting this is shown to imply that higher housing costs increase average commuting distances as well. We test these predictions on Dutch register data. Our empirical results show that outright homeowners have lower exit rates from unemployment than renters and are more reluctant to accept long commutes, which confirms Oswald’s thesis. However, highly leveraged homeowners have higher exit rates than renters and are more inclined to accept longer commutes, which confirms earlier findings in the literature.

Keywords: homeownership; unemployment duration; spatial labour markets (search for similar items in EconPapers)
JEL-codes: J6 R2 (search for similar items in EconPapers)
Date: 2013-09-19
New Economics Papers: this item is included in nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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