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The effect of homeownership on the option value of regional migration

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  • Florian Oswald

Abstract

This paper estimates a lifecycle model of consumption, housing choice, and migration in the presence of aggregate and regional shocks, using the Survey of Income and Program Participation (SIPP). The model delivers structural estimates of moving costs by ownership status, age, and family size that complement the previous literature. Using the model, I first show that migration elasticities vary substantially between renters and owners, and I estimate the consumption value of having the option to migrate across regions when there are regional shocks. This value is 19% of lifetime consumption on average, and it varies substantially with household type.

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  • Florian Oswald, 2019. "The effect of homeownership on the option value of regional migration," Quantitative Economics, Econometric Society, vol. 10(4), pages 1453-1493, November.
    • Handle: RePEc:wly:quante:v:10:y:2019:i:4:p:1453-1493
    DOI: 10.3982/QE872
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    1. David Card, 2012. "Comment: The Elusive Search For Negative Wage Impacts Of Immigration," Journal of the European Economic Association, European Economic Association, vol. 10(1), pages 211-215, February.
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    1. Bontemps, Christian & Cherbonnier, Frédéric & Magnac, Thierry, 2023. "Reducing transaction taxes on housing in highly regulated economies”," TSE Working Papers 23-1486, Toulouse School of Economics (TSE).
    2. Jonathan Halket & Lars Nesheim & Florian Oswald, 2020. "The Housing Stock, Housing Prices, And User Costs: The Roles Of Location, Structure, And Unobserved Quality," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 61(4), pages 1777-1814, November.
    3. Broulíková, Hana M. & Huber, Peter & Montag, Josef & Sunega, Petr, 2020. "Homeownership, mobility, and unemployment: Evidence from housing privatization," Journal of Housing Economics, Elsevier, vol. 50(C).
    4. Sandra Krapf & Clara H. Mulder & Michael Wagner, 2022. "The Transition to a Coresidential Partnership: Who Moves and Who Has the Partner Move In?," Population Research and Policy Review, Springer;Southern Demographic Association (SDA), vol. 41(2), pages 757-779, April.
    5. Benoit Schmutz & Modibo Sidibé & Elie Vidal-Naquet, 2021. "Why Are Low-Skilled Workers Less Mobile? The Role of Mobility Costs and Spatial Frictions," Annals of Economics and Statistics, GENES, issue 142, pages 283-304.
    6. Joseph-Simon Görlach, 2023. "Borrowing Constraints and the Dynamics of Return and Repeat Migration," Journal of Labor Economics, University of Chicago Press, vol. 41(1), pages 205-243.
    7. Mikhail Golosov & Michael Graber & Magne Mogstad & David Novgorodsky, 2024. "How Americans Respond to Idiosyncratic and Exogenous Changes in Household Wealth and Unearned Income," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 139(2), pages 1321-1395.
    8. Thomas H. Jørgensen, 2023. "Sensitivity to Calibrated Parameters," The Review of Economics and Statistics, MIT Press, vol. 105(2), pages 474-481, March.
    9. Jérôme Adda & Christian Dustmann & Joseph-Simon Görlach, 2022. "The Dynamics of Return Migration, Human Capital Accumulation, and Wage Assimilation," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 89(6), pages 2841-2871.
    10. Koşar, Gizem & Ransom, Tyler & van der Klaauw, Wilbert, 2022. "Understanding migration aversion using elicited counterfactual choice probabilities," Journal of Econometrics, Elsevier, vol. 231(1), pages 123-147.
    11. Tyler Ransom, 2022. "Labor Market Frictions and Moving Costs of the Employed and Unemployed," Journal of Human Resources, University of Wisconsin Press, vol. 57(S), pages 137-166.
    12. Mense, Andreas, 2021. "Secondary housing supply," FAU Discussion Papers in Economics 05/2021, Friedrich-Alexander University Erlangen-Nuremberg, Institute for Economics.
    13. Howard, Greg & Liebersohn, Jack, 2021. "Why is the rent so darn high? The role of growing demand to live in housing-supply-inelastic cities," Journal of Urban Economics, Elsevier, vol. 124(C).
    14. Lee, Kiryoung & Jeon, Yoontae & Jo, Chanik, 2020. "Chinese economic policy uncertainty and U.S. households' portfolio decisions," Pacific-Basin Finance Journal, Elsevier, vol. 64(C).
    15. Dirección General de Economía y Estadística, 2020. "El mercado de la vivienda en España entre 2014 y 2019," Occasional Papers 2013, Banco de España.
    16. Botsch, Matthew J. & Morris, Stephen D., 2021. "Job loss risk, expected mobility, and home ownership," Journal of Housing Economics, Elsevier, vol. 53(C).

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