Homeownership, Mobility, and Unemployment: Evidence from Housing Privatization
ISE Working Paper No. 7
51 Pages Posted: 12 Jan 2017 Last revised: 30 Dec 2017
Date Written: December 29, 2017
Homeownership is believed to cause higher unemployment. This is because homeowners face higher mobility costs that limit their job search to local labor markets. Empirical tests of this prediction have yielded mixed results so far, possibly due to the endogeneity of homeownership. This paper documents that the privatization of public housing in Central and Eastern Europe after the fall of the Iron Curtain resulted in a quasi-experimental assignment of homeownership to individual households. This facilitates a new test of the effects of homeownership on mobility and unemployment. We find only weak evidence that homeowners are less willing to move and no evidence of higher unemployment risks relative to renters.
Keywords: Homeownership, housing privatization, mobility, unemployment
JEL Classification: J61, J64, P14, P26
Suggested Citation: Suggested Citation