Housing Tenure and Unemployment

Abstract

In this article, we test whether tenure choice influences employment. This influencemight arise through a number of channels, including transaction costs, lock-in effects, wealtheffects, externalities and commuting times. These factors could collectively have either a positiveor negative effect on employment outcomes. Using Current Population Survey panel data from1988 to 2013, we conclude that tenure rates do not statistically influence employment growthrates. Using Panel Study of Income Dynamics data from 1994 to 2011 and Survey of Income andProgram Participation data from 1995 to 2013, we conclude that home-owning does not increasepeoples’ unemployment probabilities or significantly increase people’s unemployment spells ordecrease people’s wages. But home-owning does affect employment by lengthening employmentdurations and increasing the likelihood of interstate moves. By investigating some features ofhome-owing- presence of mortgages, negative equity, wealth accumulation and attachment tocommunities-we conclude that having mortgages, negative equity and wealth accumulationmight affect job outcomes, largely in a positive direction.