Housing Market Regulation and Labor Market Dynamism
27 Pages Posted: 20 May 2018 Last revised: 15 Jul 2019
Date Written: April 15, 2019
The United States labor market has become less dynamic over the past three decades. This paper explores the contribution of housing market regulation towards these declines. First, a 1sd rise in housing market regulation is associated with a 0.11-0.22sd decline in the turnover rate. Second, these declines originate from a heightened cost of living, which drives up wages and depresses the demand for labor. Third, a back-of-the-envelope exercise suggests that, given the estimated elasticities, the rise in housing market regulation accounts for 12-24% of the decline in worker reallocation between 1990 and 2009.
Keywords: cost of living, housing market regulation, labor market dynamism, turnover
JEL Classification: J23, J31, J58, R31, R51
Suggested Citation: Suggested Citation