Working paper by Marcus Ingholt featured at the NEP-DGE blog this week
The NEP-DGE discussion blog features Ph.D. Fellow Marcus Mølbak Ingholt’s working paper “House Prices, Geographical Mobility, and Unemployment” this week.
The paper treats the adverse consequences of low labor mobility on wage setting in the U.S. The paper finds that indebted homeowners’ labor mobility would have been higher during the Great Recession if falling house prices and tight credit conditions had not reduced the availability of mortgage loans. Refinancing of mortgage loans is necessary for indebted homeowners if they wish to relocate. Higher labor mobility would have caused real wages to be lower, employment to be higher, and the unemployment rate to be 0.5 p.p. lower.
The NEP-DGE blog discusses recent papers in dynamic general equilibrium theory. The blog is edited by Assistant Vice President of the Federal Reserve Bank of St. Louis Christian Zimmermann who is also the creator of the IDEAS website for cataloging research in economics.