Homeownership, Labour Market Transitions and Earnings

The paper investigates the links between homeownership, employment and earnings. The motivation stems from the lack of consensus in the literature linking these outcomes. Our analysis is cast within a dynamic setting and the endogeneity of each outcome is assessed through the estimation of a flexible panel multivariate model with random effects. The data we use are drawn from the French sample of the EU Survey on Income and Living Conditions for the years 2004–2019. Our results show that while homeowners have longer employment and unemployment spells, they must contend with lower earnings than tenants upon re-employment. Importantly, our results highlight the importance of distinguishing between outright and indebted homeowners. Indeed, the latter are found to behave more or less like tenants in the labour market. At the aggregate level, thus, the positive relationship between homeownership and unemployment rate, known as Oswald’s conjecture, might thus depend on the share of leveraged homeowners in the population.