Homeownership and Labour Market Behaviour: Interpreting the Evidence
Tinbergen Institute Discussion Paper No. 07-047/3
36 Pages Posted: 21 Jun 2007
Date Written: June 2007
This paper reviews the empirical research that has been generated by Oswald's thesis, which claims that there is a causal relationship from homeownership to unemployment. The literature confirms a decreasing effect of homeownership on geographical mobility of workers, but does not in general confirm that homeowners have longer unemployment spells or higher unemployment rates. Even though this finding is related to heterogeneity in the labour force and associated selectivity effects, there are clear indications that there is also an effect of homeownership on the search for jobs on the local labour market, especially for highly leveraged homeowners. To offer an integrated representation of the various forces at work, this paper proposes an umbrella model with endogenous search intensity that is consistent with much of the empirical evidence. In particular, it predicts lower geographical mobility of homeowners as well as higher exit rates from unemployment - by acceptance of jobs on the local labour market.
Keywords: thesis, labour market search, homeownership
JEL Classification: J61, J64, R21, R23
Suggested Citation: Suggested Citation