The Danger of High Home Ownership: Greater Unemployment

Home ownership is a common goal for societies and individuals. Yet statistical patterns suggest that a high rate of “home ownership weakens the vitality of the labour market and slowly grinds out greater rates of joblessness,” report economists David G. Blanchflower and Andrew J. Oswald in a paper for Chatham House. Home ownership may disrupt efficient functioning of the labor market by reducing mobility and business startups, perhaps because of less tolerance for commercial activity within residential communities, as well as increasing commuting times. “[W]ithout politicians being aware of it, high home ownership may slowly erode a country’s industrial base,” the writers note. Countries with low rates of home ownership like Germany and Switzerland report lower unemployment rates. To reduce unemployment, political leaders and citizens may want to rethink subsidized housing, subsidized loans and tax allowances for home ownership. The authors suggest that the correlations may have eluded researchers because of long time lags and home ownership’s gradual erosion of employment. – YaleGlobal