Home Ownership and Displaced Workers in Netherlands – Job losses result in longer commutes

As in many other countries, the Dutch owner-occupied housing market and labour market suffered from strong negative developments during the Great Recession that started in 2008. The large scale at which the transaction prices and home property values fell in the Dutch housing market is very rare — it previously occurred in the period 1978 − 1982. The central question we address is how workers adjust after job displacement, by focusing on margins of adjustment that are related to space and the importance of workers’ housing tenure. A better understanding of the use of margins of adjustment by displaced workers is relevant for policies that aim to limit the impact of negative employment shocks and policies that affect housing tenure choice through subsidising homeownership or stimulating mortgage debt.

In particular, the authors examine whether the displacement effects differ among tenants and different types of homeowners.

Job losses result in longer commutes

Using Dutch administrative data, the researchers find significant displacement effects on employment, hourly wages, commuting distance and moving. Compared with non-displaced workers, workers who were displaced are about 20 percentage points less employed two years later. Moreover, the findings show that displaced workers, on average, experience a loss in hourly wages of about 6 percent, face an increase in the commuting distance of about three kilometers and have a 0.06 percentage point lower probability of moving.

Compared to the average, the increase in the commuting distance and the decrease in moving represent about a 20% and 14% change, respectively. Interestingly, the patterns of adjustment change over the worker’s post-displacement period – a longer time since job displacement is associated with a lower loss in employment, a smaller increase in commute, and a higher loss in hourly wage. The results suggest a remarkable pattern: workers who experience a longer time of unemployment after job displacement prefer a smaller increase in the commuting distance to a lower loss in hourly wages.

Chosen excerpts by Job Market Monitor. Read the whole story at How home ownership affects displaced workers’ future labor market outcomes | IZA Newsroom