House Lock and Structural Unemployment

Abstract

A recent decline geographic mobility the United States may have been caused part by falling prices, through the in effects of financial constraints faced by households whose housing debt exceeds the market value of their home. I analyze the relationship between such house and the elevated levels and persistence of unemployment during the recent recession and its aftermath, using data that covers the period through the end of 2011. Because lock will extend job search the local labor market for homeowners whose home value has declined, I focus on differences unemployment duration between homeowners and renters across geographic areas differentiated by the severity of the decline home prices. The empirical analyses rely on microdata from the monthly Current Population Survey (CPS) files and an econometric method that enables the estimation of individual and aggregate covariate effects on completed unemployment durations synthetic cohort (pseudo-panel) data. The estimates indicate the absence of a meaningful lock effect on unemployment duration.