A Homeownership Dilemma?: Mobility After Job Loss in an Aging Workforce

Abstract

Older workers are staying in the workforce at the highest rates since the 1960's, yet their propensity to move, either between states or between counties, is at the lowest rate recorded. This prompts concerns that housing wealth losses from the Great Recession and Chinese import competition are forcing individuals to work longer to regain wealth in advance of retirement. This paper exploits Health and Retirement Study microdata to estimate a differences-in-differences-in-differences model that identifies income shocks via job displacements and housing wealth shocks via homeownership status in commuting zones that were in the top quartile of Chinese import competition exposure. I find robust evidence that homeowners and renters exhibit differential retirement, labor force attachment, and migration responses to income shocks but less consistent evidence for difference responses to housing wealth shocks. Displaced renters are 5.1% more likely to move, but displaced renters become very slightly less likely to do so and are instead 5.1 percentage points more likely to retire in response to a displacement than renters. This result explains in part why rising displacements has not resulted in rising migration, but does not explain why falling homeownership has also not done so. Using a coarse measure of migration to retirement destination counties, I find evidence that a $1,000 increase in Chinese import competition results in 325 fewer people migrating. This is circumstantial evidence that while older workers do not appear to increase their labor force attachment to recoup housing wealth losses, they may instead scale back their retirement plans.