Housing equity,residential mobility and commuting |
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| Institution: | 1. Copenhagen Business Academy, Landemærket 11, DK-1119, Copenhagen, Denmark;2. Department of Business and Economics, University of Southern Denmark, Campusvej 55, DK-5230 Odense M, Denmark;1. Florida State University, 288 Bellamy Building, Tallahassee, FL 32306, USA;2. Florida State University and NBER, 279 Bellamy Building, Tallahassee, FL 32306, USA;3. Florida State University, 039-A Bellamy Building, Tallahassee, FL 32306, USA;1. Amsterdam Business School, Faculty of Economics and Business, University of Amsterdam, Plantage Muidergracht 12, 1018 TV Amsterdam, The Netherlands\n;2. Department of Spatial Economics, Faculty of Economics and Business Administration, Vrije Universiteit Amsterdam, De Boelelaan 1105, 1081 HV Amsterdam, The Netherlands\n;3. The Amsterdam School of Real Estate, Jollemanhof 5, 1019 GW Amsterdam, The Netherlands;1. Department of Economics, The University of Auckland, Auckland, New Zealand;2. Bureau of Economic Analysis, Washington, DC, USA;1. Department of Economics, University of California, Berkeley, CA 94720, USA;2. Department of Economics, The Hebrew University, Jerusalem 91905, Israel |
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| Abstract: | Highly productive economies require a flexible labor force with workers that move in accordance with the changing demand for goods and services. In times with falling housing prices, the mobility of home owning workers may be hampered by a lock-in effect of low or even negative housing equity. This paper explores the effect of housing equity on both the residential mobility and the commuting pattern of homeowners. We merge administrative registers for the Danish population and properties and get highly reliable micro data for our analysis. We find that low and negative housing equity substantially reduces residential mobility among homeowners. The negative effect of locked-in low equity families on labor market mobility may be mitigated by commuting. However, our results show that family heads in low or negative equity homes are not found to commute more than households with higher housing equity, but also that a considerable fraction of home owning family heads commute. The analysis of the joint decision of homeowners to commute or move shows that the option of moving, as an alternative to not moving and not commuting, is chosen by five to six percent of homeowners with low housing equity, while the option of not moving but commuting is chosen by 60%. |
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