Homeownership, Mobility, and Unemployment: Evidence from Housing Privatization

ISE Working Paper No. 7

51 Pages Posted: 12 Jan 2017 Last revised: 30 Dec 2017

Hana Smrčková

University of Economics, Prague

Peter Huber

Austrian Institute of Economic Research (WIFO); Mendel University

Josef Montag

International School of Economics, Kazakh British-Technical University

Petr Sunega

Academy of Sciences of the Czech Republic

Date Written: December 29, 2017

Abstract

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

Smrčková, Hana and Huber, Peter and Montag, Josef and Sunega, Petr, Homeownership, Mobility, and Unemployment: Evidence from Housing Privatization (December 29, 2017). ISE Working Paper No. 7. Available at SSRN: https://ssrn.com/abstract=2896765 or http://dx.doi.org/10.2139/ssrn.2896765

Hana Smrčková

University of Economics, Prague ( email )

nam. W.Churchilla 4
Prague 3, 130 67
Czech Republic

Peter Huber

Austrian Institute of Economic Research (WIFO) ( email )

P.O. Box 91
Wien, A-1103
Austria

Mendel University ( email )

Zemedelska 1
Brno, South Moravia 61200
Czech Republic

Josef Montag (Contact Author)

International School of Economics, Kazakh British-Technical University

Tole bi st. 59
Almaty, 050000
Kazakhstan

Petr Sunega

Academy of Sciences of the Czech Republic ( email )

Narodni 3, 111 42
Praha 1, 117 20
Czech Republic

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