Mortgage market, wages, and homeownership

This study deals with the outstanding issues regarding the interplay between homeownership and labour market outcomes. By focussing on the mortgage market and wages, the theoretical model clearly explains why homeowners are more likely to be employed than tenants, while, at the aggregate level, a negative relationship between homeownership and better job opportunities can emerge. Higher wages increase the probability of buying a home, while an increase in the probability of finding a job increases the competition on the demand side of the mortgage market. Also, a positive effect of homeownership on wages is hard to rationalise. Indeed, the regional panel analysis in Italy finds that homeownership is not, by itself, a condition for receiving higher wages. Eventually, wages cause homeownership, but the reverse may not be true.