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House prices and employment reallocation: international evidence

Author

Listed:
  • Olympia Bover

    (Banco de España
    Institute for Fiscal Studies (IFS)
    Institute for the Study of Labor (IZA)
    Centre for Economic Policy Research (CEPR))

  • Juan F. Jimeno

    (Banco de España
    Centre for Economic Policy Research (CEPR)
    Institute for the Study of Labor (IZA))

Abstract

Over the last decade house prices increased remarkably in many countries. However, while in several countries there was an employment boom in the construction sector, in others the share of employment in this sector did not significantly change. In this paper we estimate a model of labor demand in the construction sector, featuring building constraints, which explains many of the international differences in the response of sectoral reallocation of employment to house prices. Countries with more building possibilities (Spain, Sweden and the US) have a high sectoral reallocation of employment, and display larger elasticities of labor demand in the construction sector with respect to house prices than countries that seem to have fewer building possibilities (Belgium, the Netherlands, and the UK). Nevertheless, our estimates imply that, for the whole economy, the elasticity of labor demand with respect to house prices is broadly similar across countries.

Suggested Citation

  • Olympia Bover & Juan F. Jimeno, 2007. "House prices and employment reallocation: international evidence," Working Papers 0705, Banco de España.
    • Handle: RePEc:bde:wpaper:0705
    as

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    References listed on IDEAS

    as
    1. Pietro Catte & Nathalie Girouard & Robert Price & Christophe André, 2004. "Housing Markets, Wealth and the Business Cycle," OECD Economics Department Working Papers 394, OECD Publishing.
    2. Olympia Bover, 2005. "Wealth effects on consumption: microeconometric estimates from the Spanish survey of household finances," Working Papers 0522, Banco de España.
    3. Nathalie Girouard & Mike Kennedy & Paul van den Noord & Christophe André, 2006. "Recent House Price Developments: The Role of Fundamentals," OECD Economics Department Working Papers 475, OECD Publishing.
    4. Nathalie Girouard & Sveinbjörn Blöndal, 2001. "House Prices and Economic Activity," OECD Economics Department Working Papers 279, OECD Publishing.
    5. Corden, W Max & Neary, J Peter, 1982. "Booming Sector and De-Industrialisation in a Small Open Economy," Economic Journal, Royal Economic Society, vol. 92(368), pages 825-848, December.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Balázs Égert & Rafaƚ Kierzenkowski, 2014. "Exports and Property Prices in France: Are They Connected?," The World Economy, Wiley Blackwell, vol. 37(3), pages 387-409, March.
    2. Rafal Kierzenkowski, 2009. "The Challenge of Restoring French Competitiveness," OECD Economics Department Working Papers 720, OECD Publishing.

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    More about this item

    Keywords

    house prices; labor demand; sectoral reallocation of labor;
    All these keywords.

    JEL classification:

    • R32 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Other Spatial Production and Pricing Analysis
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand

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