寻找美国梦外文文献翻译中英文.docx

寻找美国梦外文文献翻译中英文.docx

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寻找美国梦外文文献翻译中英文

寻找美国梦外文翻译中英文

英文

Housingandunemployment:

Thesearchforthe“AmericanDream”

RobertReed，EjinduUme

Abstract

Thispaperconstructsamodelofsearchandbargainingacrosstwodifferentmarkets:

thelabormarketandthehousingmarket.Interestingly,themodelhighlightsthathousingpricesandfrictionsinthehousingmarkethaveaprofoundimpactonlabormarketactivitythroughthedesireofworkerstoeventuallypurchaseahome,the“AmericanDream.”Inparticular,higherhousingpricesadverselyaffectworkers’incentivesinthelabormarketasemploymentcaneventuallyleadtoaccesstohousingthroughtheabilitytopurchaseahome.Similarly,labormarketfrictionscanimpacthousingmarketactivity.Notably,tighterhousingmarketsareassociatedwithhigherunemploymentratesandlessjobcreation.Consequently,ourworksuggeststhatpolicymakersshouldbeverycarefulinimplementingpoliciestargetedtowardshousing–housingmarketsarelikelytogeneratesignificantexternaleffectstoothersectorsoftheeconomy,especiallythelabormarket.

Keywords：

Housing，Unemployment，Searchfrictions

Introduction

TherecentfinancialcrisisintheUnitedStatesdemonstratesthattherearesignificantlinkagesbetweenhousingmarketconditionsandlabormarketperformance.Therefore,itiscriticallyimportanttostarttakingalookatthedeepconnectionsbetweenlabormarketandhousingmarketactivity.Forexample,howdoeslabormarketactivityaffecthousingmarketbehavior?

Alternatively,howdohousingmarketconditionsimpacttheperformanceofthelabormarket?

Theseareimportant,butcomplicatedquestions–activityineachsectorfeedsintotheothersector.Consequently,ignoringsuchconnectionsalmostcertainlywouldleadtoineffectivepolicymaking.Yet–thatappearstobethemodusoperandiinpolicydiscussions–forexample,currentpolicydebatesaimedatpromotinghousingmarketactivityvirtuallyomitanydiscussionoftheroleoflabormarketconditionssuchaswagesorthedurationofunemploymentspells.

Inadditiontoignoringthelinkagesbetweenbothmarkets,muchexistingresearchignoresthattherearesignificantinformationfrictionswithineachmarket.Tobegin,workersgenerallyengageinarelativelylongperiodofjobsearchbeforefindingemployment.In2005,workerswereunemployedforanaverageof18.5weeks.Therefore,eveninastronglabormarket,workersgenerallyneededaround4.5monthstolocateasuccessfuljobmatch.Bycomparison,in2011,theaveragedurationofunemploymentwasmuchhigher–nearly10months.Italsotakesarelativelylongamountoftimetosellahome–aprocessthathasbecomenoticeablymoredifficultsincethehousingrecessionbegan.In2005,only22%ofhomeswerevacantformorethan6months.Bycomparison,inthefourthquarterof2011,around35%werevacant–nearly60%more.Inparticular, GenesoveandHan（2012） usingdatafromtheNationalAssociationofRealtorsfindthatsellertimesignificantlydependsonthelevelofmarketdemand.

Giventheseobservationsofpronounceddelay,thereareclearlyappreciabletransactionscostsineachmarket.Ittakestimetofindajob.Italsotakestimetofindahome-buyer.Consequently,thestandardWalrasianmarket-clearingparadigmdoesnotapplytoeithermarket.SincetheWalrasianclearingmechanismdoesnotapply,thestandardprice-takingmechanismisnotappropriatetostudythedeterminationofwagesorhomeprices.Moreover,theeffectsofpolicydependonthetimeinvolvedinthesearchprocessandtheprice-determinationmechanismineachmarket.Notably, Henley（1998） observes:

“UKeconomistshavebeenconcernedforsometimethatthehousingandlabourmarketsmaynotoperatetogetherinafrictionlessmanner.”

Howdoesactivityinthelabormarketandhousingmarketdependontheinformationfrictionsandnon-competitivepricedeterminationineachmarket?

Howshouldpolicymakersaccountfortheconnectionsbetweenhousingandlabormarketconditions?

 Toadequatelyaddresstheseimportantconcerns,amodelthatclearlyanalyzesmarketfundamentalswith endogenous transactionscostsisrequired.Whileourultimateobjectiveistodevelopa generalequilibrium,search-theoreticmodeltoaddresstheconnectionsbetweenhousingandlabormarketoutcomes,weproceedinasequentialmannerthroughstudyingtwodifferent partialequilibrium settings.Tobegin,westudyapartial equilibriummodel ofthelabormarketwithexogenoushousingprices.Inthissetting,unemployedindividualsspendtimesearchingtofind jobvacancies.Onceaworkercontactsavacancy,workersengageinbargainingovertheirwagerate.Uponearninglabormarketincome,workerscanbeginsearchingforahometopurchasesothattheycanenjoythebenefitsofhomeownership.Thus,ourmodelintroducesanimportantconnectionbetweenhousingmarketconditionsandlabormarketactivity– thevalueoffindingajobextendsbeyondlaborincome,italsoincludesthediscountedbenefitofaccesstohousing.Notably,weareabletodemonstratethat housingmarketconditions areanimportantcomponentof labormarketincentives.

Inthismanner,thepursuitofthe“AmericanDream”isanimportantcomponentoflabormarketactivity.Therefore,frictionsinthehousingmarketcanaffectlabormarketoutcomes.Inparticular,tighterhousingconditionsandhigherhousingpricesactasaworkdisincentiveinthelabormarketbecausetheyinterruptthemechanismsbywhichemploymenteventuallyleadstoaccesstohousing.Consequently,tighterhousingmarketshaveasignificantnegativeexternaleffectonthelabormarketinwhichworkersdemandhigherwagesinbargainingwithfirms.Inturn,higherwagesleadtolessjobvacanciesandmoreunemployment.

Weturntodeterminationofhousingmarketactivity.Consistentwiththe“AmericanDream”hypothesis,thedemandforhousingcomesintothemarketasworkersfindjobs.Uponfindingasuitablehome,thebuyerandsellerbargainoverhousingprices.Aworker’ssurplusfromhomeownershipdependsonwages,theexpectedlengthoftimethattheywillremaininthehome,andtheutilityfromhomeownership.Theseller’ssurplusfromfindingabuyerdependsonthesalepriceofthehomeandtheamountoftimeitwouldtaketofindanalternativebuyer.Thus,labormarketconditionsthroughwagesandlaborforceparticipationratesmayalsoaffectpricesandtightnessinthehousingmarket.Asaresult,policiestargetedtowardsthelabormarketwouldalsotransmittohousingmarketactivity.

Finally,weconcludebystudyingageneralequilibriumsettinginwhichhousingpricesandwagesaresimultaneouslydetermined.Asonemightinferfromthepartialequilibriummodelofthelabormarket, economicconditions whichsupporthigherhousingpriceshaveanimportanteffectonlabormarketactivity.Forexample,iffrictionsfacingsellersinthehousingmarketarelower,pricesinthehousingmarketincrease.Inturn,wagesincreasesincethevalueofajobislowerwhenthehousingmarketistighter.So,lowerfrictionsinthehousingsectorcontributetolongerunemploymentspellsandlabormarketactivitysuchasvacancycreation.Thatis,housingmarketsarelikelytogeneratesignificantexternaleffectstoothersectorsoftheeconomy,especiallythelabormarket.

Consequently,ourworkcontributestoagrowingliteraturethatemphasizestheconnectionsbetweenhousingandlabormarkets.SomeoftheinitialobservationsonhousingandlabormarketswereprovidedbyOswald.Forexample, Oswald（1997） offersinitialevidencethathomeownershipratesareassociatedwithhigherunemploymentratesin OECDcountries.Inaddition,usingindividualobservationsonmarriedmalesinmetropolitanstatisticalareasintheUnitedStates, CoulsonandFisher（2009） findthatindividualsaremorelikelytobeunemployedifthelocal homeownership rateishigher.Morerecently, BlanchflowerandOswald（2013） alsoarguethatthehousingmarketcandisplacenegativeexternalitiesuponthelabormarket.Inparticular,theyobservethatthelong-runelasticitybetweenstateunemploymentratesandhomeownershipratesislargerthanone.Thatis,a1%increaseinthestatehomeownershipratewouldleadtoamorethan1%increaseinthestateunemploymentrate.Oneofthereasonsfortherelationshipstemsfromtheobservationthatstateswithhigherratesofhome-ownershipareassociatedwithlowerratesofbusinessformation.

Othercontributionsstudytherelationshipbetweenhousingandwages.Inparticular, CunninghamandReed（2013） studytheconsequencesofhousingequityforwagesamonghomeownersintheAmericanHousingSurvey.Notably,theyfindthatindividualsinanegativeequitypositionearnwagesthatarearound5%lowerthanotherhomeowners.Thatis,aweakhousingmarketcanbeassociatedwith lowerwages.Inthismanner,housingtightnessaffectswageswhichwouldbeexpectedtoaffecttheunemploymentrate.

Asweemphasize,CoulsonandFisherarguethattheWalrasianprice-takingmechanismisinappropriateforwagedeterminationinthelabormarket.Ifwagesaredeterminedthroughbargaining,higherlevelsofhomeownershipareassociatedwithlowerunemploymentratesbecausehomeownershiprestricts labormobility.However,CoulsonandFisherdonotincludea realestatemarket intheiranalysis.Consequently,incontrasttooursetting,theyareunabletolookattheimpactoflabormarketactivityonhousingconditions.Moreover,incontrasttoourframework,thedesiretopurchaseahomecannotinfluenceworkerincentivesorlabormarketperformance.Thatis,incontrastto CunninghamandReed（2013） westudyhowhousingpricesaffectwagesamongindividualswhodo not ownahome.Inthisway,wedonotproposethattherelationships