Are Homeowners Really More Unemployed?

Abstract

This article investigates the effects of homeownership on labour mobility and unemployment dur-ation. We distinguish between finding employment locally or being geographically mobile. We find that homeownership hampers the propensity to move for job reasons, but improves the chances of finding local jobs, which is in accordance with the predictions from our theoretical model. The overall hazard rate into employment is higher for homeowners, such that there is a negative cor-relation between homeownership and unemployment duration. Our empirical findings thus con-tradict the so-called Oswald hypothesis, even if support is found for the main mechanism behind the hypothesis, namely that homeownership hampers mobility. Homeownership may influence labour market outcomes in several ways, but, in particular, one link between homeownership and unemployment has been emphasised recently. Oswald (1996) presents evidence that unemployment rates and the propor-tion of homeowners are positively correlated for a number of countries and regions. The proposed mechanism suggests that homeowners are much less mobile than renters due to costs associated with the buying and selling of their homes, and so they are relatively inflexible in the labour market. Thus, if the proportion of homeowners is