Tenure choice and labour market outcomes

In a series of papers Andrew Oswald has suggested that since home owners are relatively less mobile across geographic locations than renters, regional home ownership rates are positively correlated with regional unemployment rates. This paper examines this hypothesis at the individual level. Search theory suggests that when a subset of the population is less mobile than others, this less mobile group (that is, owners) will have lower probability of employment, longer spells of unemployment and lower wages than more mobile renters. These hypotheses on inferior labour market outcomes for owners were tested using US Current Population Survey data as well as data from the Panel Survey of Income Dynamics. The empirical model suggests that these hypotheses are not supported by any of the tests. Home owners, conditionally or unconditionally, have better labour market outcomes than renters.