It may seem counterintuitive, but apparently a new study from leading economists David Blanchflower with Dartmouth’s Department of Economics and Andrew Oswald with the University of Warwick claims increases in U.S. homeownership actually lead to higher levels of unemployment.
This suggestion counters the notion that increased homeownership activity is healthy for the economy, so take it with a grain of salt.
The report, which is available here, was covered on CNBC with the news agency saying the era of building an ‘ownership society’ is now blamed for causing less social mobility and employment options.
Blanchflower and Oswald claim upticks in homeownership lead to lower levels of labor mobility, greater commute times and fewer new businesses.
These issues eventually contributed to fewer employment opportunities, they suggest.
With homeownership-centric areas having more zoning restrictions and fewer businesses coming in, an economic stall is the potential end result, the study suggests.
“Our argument is not that owners themselves are disproportionately unemployed. The evidence suggests, instead, that the housing market can produce negative ‘externalities’ upon the labor market. The time lags are long. That gradualness may explain why these important patterns are so little-known,” the economists write.
CNBC covered the report Friday.
While CNBC blames the ownership society idea on the Bush regime, HousingWire covered this issue in the past. As it turns out, the ownership society is the brainchild of both political parties. President Clinton kicked it off in the 1990s and the Bush regime happily obliged to carry it forward with little pushback anywhere in Congress in either decade.
As to why homeowners may curtail economic development in certain areas, the report says: “Homeowners might act to hold back development in their area (through zoning restrictions) in a way that could be detrimental to new jobs and entrepreneurial ventures.”
