House Prices, Mortgage Debt, and Labor Mobility

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Date Published 2017
Primary Author Radhakrishnan Gopalan, Barton Hamilton, Ankit Kalda and David Sovich
Other Authors
Theme Housing Finance and the Economy


Using detailed credit and employment data for the United States, we estimate the effect of mortgage debt on labor mobility. We find a robust negative relation between the loan-to-value ratio (LTV) of the primary residence and labor mobility. Individuals with negative home equity are 3.5 percentage points less likely to move in a year. This effect is stronger for sub-prime and liquidity-constrained borrowers. We also find that diminished labor mobility owing to higher LTVs depresses labor income growth, especially for individuals with less access to liquidity and longer tenure in their current job. Consistent with a housing-lock explanation, we find that individuals with higher LTVs have higher intra-ZIPcode job mobility. Overall, we document significant spillover from the housing market to the labor market.

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