Housing tenure and labor market impacts: The search goes on
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Housing Tenure and Labor Market Impacts_correct table 4 text.pdf
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Author(s)
Coulson, N. Edward
Fisher, Lynn M.
Date Issued
December 2008
Journal
Journal of Urban Economics
Publisher
Elsevier
Citation
Coulson, N. Edward, and Lynn M. Fisher. “Housing tenure and labor market impacts: The search goes on.” Journal of Urban Economics 65.3 (2009): 252-264. © 2008 Elsevier Inc.
Version
Author's final manuscript
Abstract
We develop two search-theoretic models emphasizing firm entry to examine the Oswald hypothesis, the idea that homeownership is linked to inferior labor market outcomes, and compare their predictions to three extant theories. The five models have surprisingly different predictions about the labor market at both the aggregate and micro levels. Using a suitable instrumental variable strategy, we estimate both micro and aggregate level regression models of wages and unemployment and compare the estimates to those predictions. We find that while homeowners are less likely to be unemployed, they also have lower wages, all else equal, compared to renters. In addition, higher regional homeownership rates are associated with a greater probability of individual worker unemployment and higher wages. The outcome of a horserace between our new search-theoretic models is mixed—the wage-posting model predicts observed unemployment impacts while a bargaining variant does a better job explaining observed wages and aggregate labor market outcomes. Overall, we conclude that firm behavior is important for understanding the labor market impacts of homeownership. Because this is the case, regional homeownership rates are not good instruments for individual tenure choice in empirical work. And while individual homeowners may have inferior labor market outcomes as compared to renters, from the viewpoint of society, higher homeownership rates may result in greater job creation and overall production, among other benefits.
MIT Department
Massachusetts Institute of Technology. Department of Urban Studies and Planning
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Article is made available in accordance with the publisher's policy and may be subject to US copyright law. Please refer to the publisher's site for terms of use.
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DOI of Published Version
http://dx.doi.org//10.1016/j.jue.2008.12.003
