Does Homeownership Lead to Longer Unemployment Spells? The Role of Mortgage Payments

28 Pages Posted: 4 Dec 2013

See all articles by Stijn Baert

Stijn Baert

Ghent University; University of Antwerp; Catholic University of Louvain (UCL); Institute for the Study of Labor (IZA)

Freddy Heylen

Sherppa - Ghent University

Daan Isebaert

Ghent University - Faculty of Economics and Business Administration

Abstract

This paper examines the impact of housing tenure choice on unemployment duration in Belgium using EU‐SILC micro data. We contribute to the literature in distinguishing homeowners with mortgage payments and outright homeowners. We simultaneously estimate unemployment duration by a mixed proportional hazard model, and the probability of being an outright homeowner, a homeowner with mortgage payments or a tenant by a mixed multinomial logit model. To be able to correctly identify the causal influence of different types of housing tenure on unemployment duration, we use instrumental variables. Our results show that homeowners with a mortgage exit unemployment first. Outright owners stay unemployed the longest. Tenants take an intermediate position. Moreover, our results reveal the different share of mortgage holders within the group of homeowners as a possible explanation for the discrepancy between former contributions to this literature.

Keywords: unemployment, housing tenure, duration analysis

JEL Classification: C41, J64, R2

Suggested Citation

Baert, Stijn and Heylen, Freddy and Isebaert, Daan, Does Homeownership Lead to Longer Unemployment Spells? The Role of Mortgage Payments. IZA Discussion Paper No. 7774. Available at SSRN: https://ssrn.com/abstract=2363275

Stijn Baert (Contact Author)

Ghent University ( email )

University of Antwerp ( email )

Prinsstraat 13
Antwerp, Antwerp 2000
Belgium

HOME PAGE: http://https://www.uantwerpen.be/nl/personeel/stijn-baert/

Catholic University of Louvain (UCL) ( email )

Place Montesquieu, 3
Louvain-la-Neuve, 1348
Belgium

HOME PAGE: http://https://www.uclouvain.be/en-309318.html

Institute for the Study of Labor (IZA) ( email )

P.O. Box 7240
Bonn, D-53072
Germany

HOME PAGE: http://www.iza.org/en/webcontent/personnel/photos/index_html?key=6832

Freddy Heylen

Sherppa - Ghent University ( email )

Tweekerkenstraat 2
Gent, 9000
Belgium

Daan Isebaert

Ghent University - Faculty of Economics and Business Administration ( email )

Ghent, B-9000
Belgium

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