| Does Homeownership Lead to Unemployment? |
| Written by Bill Russell | |
| 04.27.2007 | |
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Discuss this article on the forums. (0 posts) Recently, economists like Tim Harford at Slate have been promoting the idea that homeownership leads to unemployment: “Even when we look only at internal migration, the barriers are formidable. Wherever people seem particularly keen to own their own homes—as in the United Kingdom, Spain, and some U.S. states—employment suffers as a result.”
The hypothesis is pretty straight forward. Renters face lower relocation costs than homeowners, so homeowners tend to stick around longer in the same location and experience unemployment, while renters can more easily move across town or across the country to get a new job. The hypothesis checks out across European countries, showing that high unemployment is strongly correlated with high rates of homeownership. Since I work with US housing data everyday, I thought I would give this hypothesis a test across US States and US Counties.   The explanation for this is probably twofold. First, areas with strong job creation and low unemployment create households with high incomes who become homeowners. Second, it is much easier to move across states and counties within America than within Europe, making the option to pick up and move away from high unemployment across state and county lines a more palatable option for Americans, even if they have to bear the cost and trouble of selling their home. 
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