The role of the housing market in workers' resilience to job displacement after firm bankruptcy

Jordy Meekes; Wolter H.J. Hassink

doi:10.1016/j.jue.2018.11.005

The role of the housing market in workers' resilience to job displacement after firm bankruptcy

Jordy Meekes^*, Wolter H.J. Hassink

^*Corresponding author for this work

Research output: Contribution to journal › Article › Academic › peer-review

Abstract

We examine the role of the housing market in workers’ adjustment to job displacement. Dutch administrative monthly data were used and analysed with a quasi-experimental design involving job displacement. The estimates show that displaced workers, relative to comparable non-displaced workers, experience besides substantial losses in employment and wages also large increases in the commuting distance. Remarkably, we find that the displacement effect on the probability of changing home is negative. Thus for displaced workers commuting seems to be a more relevant margin of labour adjustment than changing home. The patterns in displacement effects change over the worker's post-displacement period – the negative effect on wages becomes more pronounced, whereas the increase in the commuting distance diminishes. The results suggest that displaced workers who are longer unemployed prefer working closer to home over higher wages. Also, we examine the role of workers’ housing state in the displacement effects. We find that leveraged displaced owners, compared with displaced tenants and outright owners, are more rapidly re-employed and experience a smaller increase in the commuting distance but also a higher loss in wage.

Original language	English
Pages (from-to)	41-65
Number of pages	25
Journal	Journal of Urban Economics
Volume	109
DOIs	https://doi.org/10.1016/j.jue.2018.11.005
Publication status	Published - 27 Jan 2019

Funding

Thanks to seminar participants at the 21st IZA Summer School in Labor Economics, Melbourne Institute of Applied Economic and Social Research, Free University Amsterdam Department of Spatial Economics, IAAEU Workshop on Labour Economics 2017, RES Ph.D. Meetings 2017, MIT Sloan School of Management ESWG, 11th Meeting of the Urban Economics Association, 28th European Association of Labour Economists Conference, Urban Economic Association Doctoral Summer School, CPB Netherlands Bureau for Economic Policy Analysis, and Utrecht University School of Economics. We wish to thank Stuart Rosenthal and two anonymous reviewers whose valuable comments substantially improved the quality of the paper. We also thank Bram van Besouw, Roberto Fernandez, Maarten Goos, Thomas van Huizen, Zornitza Kambourova, Mark Kattenberg, Bastian Ravesteijn, Vincent Schippers, Ahmad-Reza Sharifi and Coen Teulings for their insightful comments. We are grateful to Statistics Netherlands for giving us access to the administrative data. Appendix A

Keywords

Commuting distance
Employment
Geographic mobility
Housing state
Wages

UN SDGs

This output contributes to the following UN Sustainable Development Goals (SDGs)

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10.1016/j.jue.2018.11.005

1-s2.0-S0094119018300925-mainFinal published version, 5.11 MBLicence: Taverne

Cite this

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title = "The role of the housing market in workers' resilience to job displacement after firm bankruptcy",

abstract = "We examine the role of the housing market in workers{\textquoteright} adjustment to job displacement. Dutch administrative monthly data were used and analysed with a quasi-experimental design involving job displacement. The estimates show that displaced workers, relative to comparable non-displaced workers, experience besides substantial losses in employment and wages also large increases in the commuting distance. Remarkably, we find that the displacement effect on the probability of changing home is negative. Thus for displaced workers commuting seems to be a more relevant margin of labour adjustment than changing home. The patterns in displacement effects change over the worker's post-displacement period – the negative effect on wages becomes more pronounced, whereas the increase in the commuting distance diminishes. The results suggest that displaced workers who are longer unemployed prefer working closer to home over higher wages. Also, we examine the role of workers{\textquoteright} housing state in the displacement effects. We find that leveraged displaced owners, compared with displaced tenants and outright owners, are more rapidly re-employed and experience a smaller increase in the commuting distance but also a higher loss in wage.",

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N2 - We examine the role of the housing market in workers’ adjustment to job displacement. Dutch administrative monthly data were used and analysed with a quasi-experimental design involving job displacement. The estimates show that displaced workers, relative to comparable non-displaced workers, experience besides substantial losses in employment and wages also large increases in the commuting distance. Remarkably, we find that the displacement effect on the probability of changing home is negative. Thus for displaced workers commuting seems to be a more relevant margin of labour adjustment than changing home. The patterns in displacement effects change over the worker's post-displacement period – the negative effect on wages becomes more pronounced, whereas the increase in the commuting distance diminishes. The results suggest that displaced workers who are longer unemployed prefer working closer to home over higher wages. Also, we examine the role of workers’ housing state in the displacement effects. We find that leveraged displaced owners, compared with displaced tenants and outright owners, are more rapidly re-employed and experience a smaller increase in the commuting distance but also a higher loss in wage.

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KW - Employment

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The role of the housing market in workers' resilience to job displacement after firm bankruptcy

Abstract

Funding

Keywords

UN SDGs

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