Correlated Labor Market Risk and Housing Investment

47 Pages Posted: 29 Feb 2024

See all articles by Daniel Ladd

Daniel Ladd

University of California, Irvine


This paper shows that households have lower levels of housing investment when they livein areas with labor markets that are more correlated with their industry of employment.In other words, if a household lives in an area where many other households work in thesame or similar industries, then housing may be a riskier asset as it is more correlatedwith labor market income. Thus households decrease their investment in housing.Using US microdata from 2007-2017 a one-standard deviation increase in a household’scorrelated labor market risk is associated with a decline in housing investment byaround $6,750. This decline is driven by concentrations and riskiness of other correlatedindustries, suggesting agglomeration in one industry can have negative spillovers toworkers of other related industries.

Keywords: Urban, Housing, Labor, Unemployment

Suggested Citation

Ladd, Daniel, Correlated Labor Market Risk and Housing Investment. Available at SSRN: or

Daniel Ladd (Contact Author)

University of California, Irvine ( email )

P.O. Box 19556
Science Library Serials
Irvine, CA California 62697-3125
United States

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