Housing Choices and Labor Income Risk

Riksbank Research Paper Series No. 103

Sveriges Riksbank Working Paper Series No. 272

79 Pages Posted: 18 Dec 2013

See all articles by Thomas Jansson

Thomas Jansson

Sveriges Riksbank - Research Division

Date Written: August 1, 2013

Abstract

I show that individuals whose unemployment risk tends to increase more when local home prices fall optimally invest less in owner-occupied housing. Using a unique, Swedish register-based database, I find that a one standard deviation increase in the covariance between individually estimated unemployment risks and local home prices implies an average increase in the value of households' investments in owner-occupied housing of USD 13,300. Further, I find, in line with the predictions of my theoretical model, that same-industry couples rent more often, but, conditional on ownership, invest USD 9,200 more on average in single-family homes than different-industry couples.

Keywords: homeownership, housing demand, unemployment, house price risk

JEL Classification: D12, D14, R21

Suggested Citation

Jansson, Thomas, Housing Choices and Labor Income Risk (August 1, 2013). Riksbank Research Paper Series No. 103, Sveriges Riksbank Working Paper Series No. 272 , Available at SSRN: https://ssrn.com/abstract=2346187 or http://dx.doi.org/10.2139/ssrn.2346187

Thomas Jansson (Contact Author)

Sveriges Riksbank - Research Division ( email )

S-103 37 Stockholm
Sweden

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