Local Labor Market Shocks and Residential Mortgage Payments: Evidence from Shale Oil and Gas Booms
38 Pages Posted: 5 May 2016
Date Written: April 30, 2016
Understanding how changes to local labor market conditions impact household spending and savings decisions is a central topic in labor economics. Frequently, housing is the largest item on a household's balance sheet, and therefore making monthly mortgage payments is often both the largest regular expenditure as well as a primary savings vehicle for households. To investigate the dynamics of this relationship, we examine mortgage payment choices of homeowners who purchased property in areas that later experienced a positive shock to local economic conditions via the shale oil and gas boom. Using a large loan-level dataset with detailed information about mortgage originations and monthly payments, we find that borrowers with properties located in areas with shale oil and gas booms experienced a 6% reduction in the probability of missing a mortgage payment.
JEL Classification: Q33, Q35, Q43
Suggested Citation: Suggested Citation