Are American homeowners locked into their houses? The impact of housing market conditions on state-to-state migration

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. U.S. policymakers are concerned that negative home equity arising from the severe housing market decline may be constraining geographic mobility and consequently serving as a factor in the nation's persistently high unemployment rate. Indeed, the widespread drop in house prices since 2007 has increased the share of homeowners who are underwater on their mortgages. At the same time, migration across states and among homeowners has fallen sharply. Using a logistic regression framework to analyze data from the Internal Revenue Service on state-to-state migration between 2006 and 2009, the authors discover evidence that "house lock" decreases mobility but find it has a negligible impact on the national unemployment rate. A one-standard deviation increase in the share of underwater nonprime households in the origin state reduces the outflow of migrants from the origin to the destination state by 2.9 percent. When aggregated across the United States, this decrease in mobility reduces the national state-to-state migration rate by 0.05 percentage points, resulting in roughly 110,000 to 150,000 fewer individuals migrating across state lines in any given year. Assuming that all of these discouraged migrants were job-seekers who were previously unemployed before relocating and then found a job in their new state would reduce the nation's unemployment rate by at most one-tenth of a percentage point in a given year. The cumulative effect over this period would yield an unemployment rate of 9.0 percent versus 9.3 percent in 2009. Recognizing that not all state-to-state migrants are job-seekers, not all jobseekers were previously unemployed, and not all previously unemployed job-seekers will successfully find work in their new location yields an unemployment rate that is virtually unchanged from the actual one that prevailed from 2006 to 2009. Terms of use: Documents in JEL Classifications: J61, R23

Population Aging, Migration Spillovers, and the Decline in Interstate Migration

“…Following the Great Recession, several recent papers study the interactions between the housing market, gross and net worker geographic reallocation, and geographic mismatch. Some examples include Aaronson and Davis (2011), Barnichon and Figura (2011), Valletta (2013), Ferreira et al (2012, Schulhofer-Wohl (2011), Sahin et al (2012, Modestino and Dennett (2013), , Nenov (2012), and Karahan and Rhee (2013).…”

House lock and structural unemployment

“…These papers can be grouped into three broad categories: (i) macroeconomic models of the impact of the housing downturn on labor mobility and unemployment (Herkenhoff and Ohanian 2011;Karahan and Rhee 2011;Sterk 2010); (ii) empirical studies of recent changes in geographic mobility and their implications for labor market outcomes (Aaronson and Davis 2011;Donovan and Schnure 2011;Modestino and Dennett 2011;Molloy, Smith, and Wozniak 2011);(iii) direct assessments of the relationship between housing market conditions, geographic mobility, and individual labor market outcomes (Farber 2010, Schmitt andWarner 2011).…”

Does High Home-Ownership Impair the Labor Market?

“…Consistent with this, new work by Modestino and Dennett (2013) finds little evidence that house-lock contributes to the pattern of US unemployment.…”