Housing Market Regulation and Labor Market Dynamism

27 Pages Posted: 20 May 2018 Last revised: 15 Jul 2019

See all articles by Christos Makridis

Christos Makridis

Massachusetts Institute of Technology (MIT) - Sloan School of Management

Date Written: April 15, 2019

Abstract

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

Makridis, Christos, Housing Market Regulation and Labor Market Dynamism (April 15, 2019). Available at SSRN: https://ssrn.com/abstract=3173449 or http://dx.doi.org/10.2139/ssrn.3173449

Christos Makridis (Contact Author)

Massachusetts Institute of Technology (MIT) - Sloan School of Management ( email )

100 Main Street
E62-416
Cambridge, MA 02142
United States

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