House Prices, Geographical Mobility, and Unemployment
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House Prices, Geographical Mobility, and Unemployment. / Ingholt, Marcus Mølbak.
2017.Research output: Working paper › Research
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TY - UNPB
T1 - House Prices, Geographical Mobility, and Unemployment
AU - Ingholt, Marcus Mølbak
PY - 2017
Y1 - 2017
N2 - Geographical mobility correlates positively with house prices and negatively with unemployment over the U.S. business cycle. I present a DSGE model in which declining house prices and tight credit conditions impede the mobility of indebted workers. This reduces the workers’ cross-area competition for jobs, causing wages and unemployment to rise. A Bayesian estimation shows that this channel more than quadruples the response of unemployment to adverse housing market shocks. The estimation also shows that adverse housing market shocks caused the decline in mobility during the Great Recession. Absent this decline, the unemployment rate would have been 0.5 p.p. lower.
AB - Geographical mobility correlates positively with house prices and negatively with unemployment over the U.S. business cycle. I present a DSGE model in which declining house prices and tight credit conditions impede the mobility of indebted workers. This reduces the workers’ cross-area competition for jobs, causing wages and unemployment to rise. A Bayesian estimation shows that this channel more than quadruples the response of unemployment to adverse housing market shocks. The estimation also shows that adverse housing market shocks caused the decline in mobility during the Great Recession. Absent this decline, the unemployment rate would have been 0.5 p.p. lower.
KW - Faculty of Social Sciences
KW - D58
KW - E24
KW - E32
KW - E44
KW - R21
KW - R23
KW - Refinancing collateral constraint
KW - Geographical mobility
KW - Wage setting
KW - DSGE model
KW - Refinancing collateral constraint
KW - Geographical mobility
KW - Wage setting
KW - DSGE model
M3 - Working paper
T3 - University of Copenhagen. Institute of Economics. Discussion Papers (Online)
BT - House Prices, Geographical Mobility, and Unemployment
ER -
ID: 178283102