Housing Tenure, Job Search Intensity, and Labour Market Outcomes (Chapter 6)

To study the labour market outcomes of homeowners (both mortgage-free and with a mortgage) and tenants, this chapter introduces the feature known as “job search intensity”. Intuitively, searching for a job more intensively makes a job match easier. More effort in searching for a job, however, is costly. In choosing the optimal level of intensity, therefore, the unemployed, both homeowners and tenants, face a trade-off between marginal benefits and costs. Since the labour market surpluses of homeowners and tenants are different, the same trade-off will lead to different labour market outcomes. This chapter shows that the job search intensity of outright homeowners is lower than the job search effort of both tenants and homeowners with a mortgage, while the comparison between the job search effort of tenants and the job search effort of homeowners with a mortgage crucially depends on the difference between rent and mortgage burden.