We use individual-level credit reports merged with loan-level mortgage data to estimate how home equity interacted with mobility in relatively weak and strong labor markets in the United States during the Great Recession. We construct a dynamic model of housing, consumption, employment, and relocation, which provides a structural interpretation of our empirical results and allows us to explore the role that foreclosure played in labor mobility. We find that negative home equity is not a significant barrier to job-related mobility because the benefits of accepting an out-of-area job outweigh the costs of moving. This pattern holds even if homeowners are not able to default on their mortgages.
Demyanyk, Yuliya, Dmytro Hryshko, María Jose Luengo-Prado, and Bent E. Sørensen.
"Moving to a Job: The Role of Home Equity, Debt, and Access to Credit."
American Economic Journal: Macroeconomics,
Household Saving; Personal Finance
Geographic Labor Mobility; Immigrant Workers
Urban, Rural, Regional, Real Estate, and Transportation Economics: Regional Migration; Regional Labor Markets; Population; Neighborhood Characteristics
Housing Supply and Markets