Dream Chasers: The Draw and the Downside of Following House Price Signals
53 Pages Posted: 21 Apr 2020 Last revised: 8 Jun 2020
Date Written: April 16, 2020
We study individual labor market decisions during the house price run-up of the early 2000s using the career paths of nearly 7 million workers. We find that individuals switch careers to become real estate agents (REAs) at higher rates in areas with stronger house price growth, despite little or no growth in average REA wages. We find that those drawn into real estate come from virtually all parts of the skill, wage, and education spectrums, and respond to both fundamental and non-fundamental house price growth. Examining wages, we find that those drawn into REA near the peak of the run-up experienced substantially lower wage paths than similar non-entrants through the end of our sample in 2017. These effects are particularly severe for entrants in areas with higher non-fundamental growth. Overall, we shed light on some important consequences of house price fluctuations, both fundamental and non-fundamental, on labor market outcomes.
Keywords: House Prices, Human Capital, Job Switching, Career Choice, Real Estate Agents
JEL Classification: E32, J24, J31, R21, R31
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