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Local Labor Market Shocks and Residential Mortgage Payments: Evidence from Shale Oil and Gas Booms

38 Pages Posted: 5 May 2016  

Meagan McCollum

Baruch College, CUNY; City University of New York (CUNY) - Department of Real Estate

Gregory Upton Jr.

Louisiana State University, Baton Rouge

Date Written: April 30, 2016

Abstract

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

McCollum, Meagan and Upton, Gregory, Local Labor Market Shocks and Residential Mortgage Payments: Evidence from Shale Oil and Gas Booms (April 30, 2016). USAEE Working Paper, Forthcoming. Available at SSRN: https://ssrn.com/abstract=2774550 or http://dx.doi.org/10.2139/ssrn.2774550

Meagan McCollum

Baruch College, CUNY ( email )

17 Lexington Ave., Box B10-225
New York, NY 10010
United States

City University of New York (CUNY) - Department of Real Estate ( email )

United States

Gregory Upton Jr. (Contact Author)

Louisiana State University, Baton Rouge ( email )

Baton Rouge, LA 70803
United States

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