The Effect of Housing Market Disequilibrium on the Supply of Labor: Evidence from Poland, 1989–1990*

This paper examines the effect of housing market disequilibrium on the supply of labor. Earlier studies suggested that housing market disequilibria affected other markets through altered consumption patterns (Podkaminer 1982 , 1988 ) or because housing shortages restricted labor mobility (Mayo and Stein 1988 ). This paper examines the disincentive to supply labor which arises from housing market disequilibrium. The disequilibrium is measured by four variables. One is a measure of density, while the others are based upon the number of persons in official housing queues. Each of the variables is negative and significant in the two-stage least squares estimates of labor supply. Estimates disaggregated by skill-class are also presented. Housing market disequilibrium has the greatest impact on the labor supply of the least skilled.