Please use this identifier to cite or link to this item: http://hdl.handle.net/2445/175695
Title: Mom, Dad : I’m staying. Initial labor market conditions, housing markets and welfare
Author: Martínez Mazza, Rodrigo
Keywords: Dret a l'habitatge
Inserció laboral
Mercat de treball
Estat del benestar
Right to housing
Occupational Integration
Labor market
Welfare state
Issue Date: 2020
Publisher: Institut d’Economia de Barcelona
Series/Report no: [WP E-IEB20/14]
Abstract: Young individuals are currently living with their parents more than at any other point in time, while also spending more on housing. In this paper, I first show how labor market entry conditions affect housing tenure and affordability in the long term, by using the unemployment rate at the time of graduation as an exogenous shock to income. I perform this analysis across Europe for the last 25 years. Results indicate that a 1 pp increase in the unemployment rate at the time of graduation leads, one year after, to (1) a 1.50 pp increase in the probability of living with parents, (2) a 1.02 pp decrease in the probability of home-ownership and 0.45 pp decrease in renting, and (3) worse affordability. Second, I develop an OLG model to link income shocks for Young agents with changes in housing tenure at the aggregate level. I allow for an outside option for landlords which can introduce rigidity into the rental market. Results show that if rental markets are rigid, an income shock to young agents will translate into a larger share of them living with their parents, worse affordability, and larger welfare losses. Finally, I perform a policy exercise based on the French housing aid system. I show that housing aid policies can help to recover welfare losses for young agents, byenabling them to afford to rent. Recognizing the right scenario for the implementation of these policies is key to ensure welfare gains concentrate on the targeted population.
Note: Reproducció del document publicat a: https://ieb.ub.edu/wp-content/uploads/2020/12/Doc2020-14-1.pdf
It is part of: IEB Working Paper 2020/14
URI: http://hdl.handle.net/2445/175695
Appears in Collections:IEB (Institut d’Economia de Barcelona) – Working Papers

Files in This Item:
File Description SizeFormat 
IEB20-14_MartinezMazza.pdf2.83 MBAdobe PDFView/Open


This item is licensed under a Creative Commons License Creative Commons