Homeownership, mobility, and unemployment: Evidence from housing privatization

• Published in: Journal of housing economics Vol. 50; p. 101728
• Main Authors: Broulíková, Hana M., Huber, Peter, Montag, Josef, Sunega, Petr
• Format: Journal Article
• Language: English
• Published: Elsevier Inc 01.12.2020
• Subjects: Homeownership; Housing privatization; Mobility; Unemployment; P14; J61; Homeownership; Housing privatization; Mobility; J64; Unemployment
• ISSN: 1051-1377; 1096-0791
• DOI: 10.1016/j.jhe.2020.101728

•We use housing privatization in transition countries to study the effects of homeownership on mobility and unemployment.•We cannot reject that homeownership reduces mobility.•We find that homeownership does not increase unemployment.•These results hold in two independent individual-level datasets. Homeownership is believed to cause higher unemployment. This is because homeowners face higher mobility costs that limit their job search to local labor markets. Empirical tests of this prediction have yielded mixed results so far, possibly due to the endogeneity of homeownership. This paper proposes that the privatization of public housing in Central and Eastern Europe after the fall of the Iron Curtain was a substantial policy shock that generated largely exogenous assignment of homeownership to individual households. This facilitates a new test of the effects of homeownership on mobility and unemployment: First, our empirical results do not reject that homeownership reduces mobility. Second, our results are inconsistent with homeownership increasing unemployment.