Homeownership discredited : do rising homeownership rates lead to higher unemployment rates?
Thesis (M.P.P.)--Georgetown University, 2010.; Includes bibliographical references.; Text (Electronic thesis) in PDF format. This paper considers whether increasing rates of homeownership are correlated with increasing rates of unemployment, controlling for both race and age. Using data from the 1990 and 2000 U.S. Census, the 2008 American Community Survey, and the 1990, 2000, and 2008 U.S. Bureau of Labor Statistics, regression analysis is applied to 153 Metropolitan Statistical Areas (MSAs) across three separate time periods, 1990, 2000, and 2008, to assess the effects that changing homeownership rates have on unemployment rates. The conclusions reached in this analysis show that changing homeownership rates have a statistically and economically significant effect on unemployment, though the direction of the correlation changes depending which years are tested. For example, testing the relationship between changing homeownership rates and unemployment rates from 1990 to 2000 shows a statistically significant negative correlation, meaning that as homeownership rates increased, unemployment rates decreased, all else equal. Conversely, testing the relationship from 2000 to 2008 shows a statistically significant positive correlation, meaning that as homeownership rates increased, unemployment rates also increased, all else equal.; It is also important to note that the control variables for race and age had a statistically significant relationship with unemployment and appeared to be correlated to homeownership rates, since the coefficient on homeownership changed when these variables were added. For each of my models where percentage of population that is white was statistically significant, my results indicated a negative correlation, meaning that as the percentage of the population became whiter, unemployment rates decreased. The direction of the relationship between percentage of the population under 35 and unemployment rates wasn't as consistent as the relationship between percentage of the population that is white and unemployment rates, but in over half the models where there was a statistically significant relationship, the percentage of the population under 35 had a positive correlation, meaning that as the percentage of the population under 35 increased, unemployment rates also increased.; While the impact and direction that changing homeownership rates have on unemployment rates differed depending on the years studied, it is important to note that homeownership can, under certain circumstances, lead to higher unemployment rates, as it did from 2000 to 2008. This may be explained by the fact that homeownership reduces labor market mobility and may prolong the duration of unemployment since homeowners may be unwilling or unable to move to areas where they might stand a better chance of finding employment.; To fully understand the effects of changing homeownership rates on unemployment, however, additional research will need to be conducted to identify the relationship between the two variables across time. It is unclear whether homeownership is causally related to unemployment, or if homeownership only impacts areas that already have increasing rates of unemployment. In the latter case, homeownership would act as an accelerant, rather than the primary cause.
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