The Effects of Home Ownership on Post-unemployment Wages

Abstract

This paper studies the effects of home ownership on job search outcomes. In contrast to previous literature focusing mainly on the impact of home ownership on unemployment rate and duration, this paper looks at the relationship between home ownership and post-unemployment wages. Using the Survey of Income and Program Participation 1996–2008 panels, I find that home ownership reduces post-unemployment wages, and this negative wage effect is particularly evident when the unemployed homeowner is located in either a declining housing market or a distressed labor market. These results are robust after using state-level mortgage interest deductions as an instrument for home ownership status.

Keywords: Job Search, Post-Unemployment Wage, Home Ownership

JEL Classification: J30, J64, J61