House Prices, Geographical Mobility, and Unemployment

Ingholt, Marcus Mølbak

doi:10.2139/ssrn.2949737

Cited by 2 publications

(2 citation statements)

References 26 publications

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“…In the presence of unemployment which may lead to house price reductions, indebted workers become technically insolvent, and credit tightening raises loan-to-value limits. Such adverse housing market movements therefore cause indebted workers (who forecast unemployment) less willing to accept long-distance job offers, as they require that the workers decrease consumption to pay back their excess debt (Sterk, 2015; Ingholt, 2017). Indebted homeowners are forced to refinance their mortgage loans when relocating, which affects their willingness to do so.…”

Section: Estimation Results and Discussionmentioning

confidence: 99%

House prices and unemployment: an empirical analysis of causality

Irandoust

2019

IJHMA

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Purpose This paper aims to examine whether there exists a long-run causal relationship between house prices and unemployment rates for eight major European countries. Design/methodology/approach The bootstrap panel Granger causality approach that accounts for cross-sectional dependence, slope heterogeneity and structural breaks is used to detect the direction of causality. Findings The empirical findings for the overall panel support the presence of unidirectional causality running from house prices to unemployment. Practical implications The findings are not only important for households but also for policymakers concerned with economic and financial stability. Originality/value There are only a limited number of studies that have investigated the direct link between house prices and employment or unemployment. Given the increased importance of labor market variables, particularly the choice of the unemployment rate as a key indicator in designing forward guidance and the increased financial stability concerns regarding house price dynamics, it is important to better understand the causal linkages between house prices and unemployment rates. To the best of the author’s knowledge, this paper is the first to apply the bootstrap panel Granger causality approach to examine the relationship between house prices and unemployment rates.

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Section: Estimation Results and Discussionmentioning

confidence: 99%

House prices and unemployment: an empirical analysis of causality

Irandoust

2019

IJHMA

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“…Specifically, the inclusion of regional housing prices in the set of external instruments reflects the idea that they are typically conceived as a proxy capturing some (unobserved) regional amenities that are valued by house buyers (Pekkala and Tervo, ). Moreover, housing prices may affect labor mobility through a lock‐in effect of technical insolvency (Henley, ; Ferreira et al ., ) which tends to discourage migration in the case of indebted homeowners that would be otherwise forced to refinance their mortgage loans when relocating (Ingholt, ). Such adverse housing market movements make workers less willing to accept long‐distance job offers, as they require that the workers reduce consumption in order to pay back their excess debt.…”

Section: Modeling Regional Unemploymentmentioning

confidence: 99%

Interregional Migration of Human Capital and Unemployment Dynamics: Evidence from Italian Provinces

Basile

Girardi²,

Mantuano

et al. 2019

German Economic Review

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Since the mid‐1990s interregional migration flows in Italy have dramatically increased, especially from the South to the North. These flows are characterized by a strong component of human capital, involving a large number of workers with secondary and tertiary education. Using longitudinal data for the period 2002–2011 at NUTS‐3 territorial level, we document that long‐distance (i.e., South‐North) net migration of high‐skill workers has increased the unemployment at origin and decreased it at destination, thus deepening North–South unemployment disparities. On the other hand, long‐distance net migration of low‐skill workers has had the opposite effect, by lowering the unemployment at origin and raising it at destination. Further evidence also suggests that the diverging effect of high‐skill migration dominates the converging effect of low‐skill migration. Thus, concerns for an ‘internal brain drain’ from Southern regions look not groundless.

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House Prices, Geographical Mobility, and Unemployment

Cited by 2 publications

References 26 publications

House prices and unemployment: an empirical analysis of causality

House prices and unemployment: an empirical analysis of causality

Interregional Migration of Human Capital and Unemployment Dynamics: Evidence from Italian Provinces

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