Does promoting homeownership always damage labour market performances?

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Accueil » Does promoting homeownership always damage labour market performances?
12 Juillet 2018
Types de publication: 
Cahier de recherche
Auteur(s): 
Julie Beugnot
Guy Lacroix
Olivier Bargain
Axe de recherche: 
Enjeux économiques et financiers
Mots-clés: 
Stochastic job matching
Homeownership
Unemployment
Mobility
Classification JEL: 
H31
J61
J64
R23

In this paper we analyse the link between homeownership and various aggregate and individual labour market outcomes. Our aim is to investigate the likely consequences of public policies that promote homeownership. To this end, we develop a circular firm-worker matching model with Nash-bargained wage setting and free market entry. Homeowners are assumed to be less mobile than tenants and to bear higher mobility costs. Our numerical exercises show that tenants usually have lower unemployment rates and lower wage rates than homeowners. Importantly, workers’ performances do not necessarily improve following an increase in the proportion of homeowners. The latter crucially depends on the relative utility enjoyed by homeowners and tenants when unemployed. In the aggregate, nevertheless, we find that the unemployment rate generally increases following an increase in the proportion of homeowners. Yet, the link between the two can be reversed if the homeowners’ utility is lower than that of tenants when unemployed. Our model thus identifies a number of conditions under which Oswald’s conjecture is likely to hold or not. Thus, our results do not necessarily support the view that policies fostering homeownership are adequate public policies given their potentially negative effect on the labour market.

Contact: 

Julie Beugnot : CRESE EA3190, Univ. Bourgogne Franche-Comté, F-25000 Besançon, France, julie.beugnot@univ-fcomte.fr
Olivier Charlot : THEMA, Université de Cergy-Pontoise, olivier.charlot@u-cergy.fr
Guy Lacroix : Department of economics, Université Laval, Québec, HEC-Montreal and CIRANO, Canada, Guy.Lacroix@ecn.ulaval.ca