Housing Market Regulation and the Social Demand for Job Protection

32 Pages Posted: 19 Jul 2010

See all articles by Bruno Decreuse

Bruno Decreuse

University of Angers - Research Group in Quantitative Saving (GREQAM); Ecole des Hautes Etudes en Sciences Sociales (EHESS)

Tanguy Van Ypersele

National Center for Scientific Research (CNRS) - Research Group in Quantitative Saving (GREQAM); Centre for Economic Policy Research (CEPR)

Abstract

Controlling for country fixed effects, there is a positive and statistically significant relationship between the degree of housing market regulation (HMR) and the strictness of employment protection legislation (EPL) in OECD countries. We provide a model in which HMR increases foreclosure costs in case of mortgage default, while EPL raises the administrative cost of dismissal. Owing to banks lending behavior, individuals' demand for job protection increases with the cost of foreclosure. We use the model to discuss social housing and family insurance, the case for mortgage unemployment insurance, regulations on the use of fixed-term contracts, the impact of min down-payment policies, feed-back effects from HMR to EPL, and the failure of a 2006 French reform of the labor contracts.

Keywords: Fixed-term contracts, Foreclosure costs, Job protection

JEL Classification: G2, K31, R2

Suggested Citation

Decreuse, Bruno and Van Ypersele, Tanguy, Housing Market Regulation and the Social Demand for Job Protection. Centre for Economic Policy Research (CEPR), Forthcoming. Available at SSRN: https://ssrn.com/abstract=1640367

Bruno Decreuse (Contact Author)

University of Angers - Research Group in Quantitative Saving (GREQAM) ( email )

Centre de la Vieille Charité
2, rue de la Charité
Marseille, 13002
France

Ecole des Hautes Etudes en Sciences Sociales (EHESS)

54, boulevard Raspail
Paris, 75006
France

Tanguy Van Ypersele

National Center for Scientific Research (CNRS) - Research Group in Quantitative Saving (GREQAM) ( email )

Centre de la Vieille Charité
2 rue de la Charité
Marseille, 13002
France
+33 4 4293 5983 (Phone)
+33 4 4293 0968 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

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