Using a Structural‐Form Model to Analyze the Impact of Home Ownership on Unemployment Duration

It is often found that the impact of home ownership on the hazard rate for leaving unemployment is positive, indicating that home ownership helps workers to leave unemployment for a paid job. However, little emphasis has been given to how such a relationship can be explained. This paper estimates a structural‐form model that allows for self‐selection into home ownership and the risk of home owners losing their property during a spell of unemployment. We find a substantial amount of self‐selection using indirect inference based on a mixed proportional hazards‐rate model and find virtually no impact of home ownership on individual labor market performance. Copyright © 2016 John Wiley & Sons, Ltd.