Does Promoting Homeownership Always Damage Labour Market Performances?

2018

In this paper we analyse the link between homeownership and various aggregate and individual labour market outcomes. Our aim is to investigate the likely consequences of public policies that promote homeownership. To this end, we develop a circular firm-worker matching model with Nash-bargained wage setting and free market entry. Homeowners are assumed to be less mobile than tenants and to bear higher mobility costs. Our numerical exercises show that tenants usually have lower unemployment rates and lower wage rates than homeowners. Importantly, workersʼ performances do not necessarily improve following an increase in the proportion of homeowners. The latter crucially depends on the relativ…