The Impact of Homeownership on the Duration of Unemployment

Housing stock is one of the most important components of household wealth in the U.S. Public policy has vigorously promoted home ownership based on the belief that it strengthens the individual’s commitment and contribution to the community. Yet it is possible that this social goal generates unanticipated consequences in the labor market. This study examines potential labor market influences of home ownership, focusing on the length of unemployment. Using a sample of unemployed workers from the 1986 Panel Study of Income Dynamics, this study concludes that for some unemployed, home ownership significantly reduces unemployment duration. This appears to occur through two channels. First, the burden of monthly mortgage payments stimulates more vigorous job search, and second, home equity aids job search through a wealth effect.