Empirical essays on the interaction between housing and labour markets

• Main Author: Ha, Sejeong
• Published: London School of Economics and Political Science (University of London) 2012
• Subjects: 363.5; HC Economic History and Conditions
• Online Access: http://ethos.bl.uk/OrderDetails.do?uin=uk.bl.ethos.571132

This thesis presents three empirical essays on the interaction of housing and labour markets, which generates academically meaningful social outcomes. The first essay looks at whether one’s tenure choice affects unemployment as this question has potential implications for homeownership subsidy schemes adopted in many advanced countries. The contribution of this essay is mainly methodological in that it rigorously deals with the endogeneity of homeownership by taking an IV approach with instruments not adopted previously for studies in the UK in conjunction with panel data models. Using the local homeownership rate and parental homeownership status as an instrument, it shows that homeownership does not increase the probability of being unemployed. The second essay highlights the role of local housing market information as a determinant of housing tenure. As the distance a mover wants to move increases, the costs of collecting information on the destination housing market rise and the quality and amount of the information collected fall. Therefore, it is hypothesised that the longer the distance moved, the more likely movers are to choose private renting over owner-occupation since homeownership decisions require a large amount of information on the target properties and their neighbourhoods. Empirical tests that control for relevant characteristics correlated with distance moved and tenure decisions provide supporting evidence for this hypothesis. The last essay is the first UK study to confirm that commuting time has a negative influence on worker effort. The topic has important implications for transportation policy, employer’s commuting welfare strategy and hiring decisions and individual worker’s location decisions. As commuting is physically and mentally tiring, it could influence worker effort negatively. The hypothesis turns out to be true when the absenteeism rate and unpaid overtime hours are used as proxy variables for work effort.