Here are a couple of charts from some research carried out by Andrew J Oswald for the University of Warwick in 1999. That makes the precise statistics a little out of date, but the overall picture seems pretty clear:
Wednesday, 25 November 2009
Owner-occupation - not all it's cracked up to be
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7 comments:
Hmmm. I'd like to see equivalent data for the percentage in social housing. After all, in the UK at least, that is even less flexible than home ownership - and it's often associated with unemployment. Maybe living in social housing makes you likely to be unemployed? No, that can't be right...
AC, it is less flexible and is (largely) given to people who are unemployed in the first place, as it is being sold off to people who can afford a mortgage, i.e. have a job. Further, if you are brought up on a 'no hope' estate then you are more likely to be unemployed.
But this is all deliberate and intentional. In the heyday of council housing when 30% of people lived in council housing, unemployment was no higher there than anywhere else.
And this is all completely irrelevant to the debate on whether owner-occupation is an unalloyed good.
Co-incidence or causality? Anything in Mr Oswald's report giving a mechanism to support the latter theory?
@bayard
Oswald's article is on the Net ,so you can judge for yourself: The Housing Market and Europe's Unemployment-a Non-technical paper.
Seems pretty clear from this that Oswald thinks home-ownership causes unemployment.In fact he pretty well proves it.
He has, by the way, gone all Fotheringtion Thomas and begun to research Happiness lately.Seems to be an occupational hazard among hardened number crunchers.
One irony of the Homeownerist drive to exterminate social housing was that it was done and dusted just as the cavalry came over the hill in the form of computerisation.The weakness of widespread social housing was immobilism and difficulty of transfers.Had publicly owned housing survived, the Net would have made it easier to move than from privately owned housing which,as Oswald showed, keeps the unemployed property owner rooted to the spot.
Which country has 57% employment ie 43% unemployed in various ways? Is it a sub-state like Northern Ireland?
B, as it is unlikely that unemployment causes home-ownership, it must be the other way round.
Being rooted to the spot (whether as owner-occupier in nequity or in social housing - once you've got a place it is tempting to just stay there because it is so difficult getting a new place) makes it more difficult to move elsewhere to find a job.
Don't forget that Home-Owner-Ism means that taxes on the productive economy have to be hiked to fund the reduction in taxes on property, which in turn causes unemployment. And recent years have shown that you can make as much money from owning a home as you can by going out to work.
DBC, agreed.
NeilC, that was Hungary.
All Oswald appears to be saying is that:
1. Were there a flourishing rental market, unemployment might be lower;
2. Were there a more flexible use of council and association housing, unemployment might be lower;
3. Were it easier to move house, as an owner-occupier, unemployment might be lower.
In all humility I could have told him that - as did Friedman in the lecture Oswald mentions. Oswald believes - but I can't see the proof - that owner-occupation crowds out non-owner-occupation solutions to the employment problem. He also seems to be saying that frictions in the O-O market are worse than those in an (idealised) non O-O market.
Figure 5 shows very little correlation for the least regulated country and one with the most open housing market - the US - although Oswald "intuits" that there is a "strong" correlation between home-ownership and unemployment: apparently "the man in Whitehall - or the University of Warwick - really does know better".
Also Figure 6 deals with "unemployment benefits". I assume that this excludes all other benefis such as the UK faux disability benefits accruing to those either within or treated as outside the labour force (although during the period he deals with, this might not have been so rife).
Oswald then concludes (I think) that the problems in 1, 2 and 3 are somehow prevented by a flourishing O-O market. A more obvious and less laboriously constructed conclusion (again, per Friedman) is that were there not frictions in every part of the housing market then all markets (including the employment market and the transport market) would be more efficient.
Forgetting that O-O might be, to a large extent, a non-economic ambition Oswald's implied solution (since it's one of the 5 "problems") must include the prevention of owner-occupiers exercising their political strength (in planning inquiries etc) so that the state (through councils/housing associations) or developers can impose their preferred solutions locally. This would certainly contribute to reducing home-ownership.
Such a solution might "solve" some unemployment but would certainly create some messy democratic problems. Since Oswald's paper has been posted on a blog which strongly advocates LVT as an economic panacea, Oswald's implied solution would not, of course, be a problem for fans of LVT since the downgrading of a local area would be "compensated" by a lowering of LVT. I would be happy to pay a higher LVT (as I currently pay a higher council tax) to keep my local area in the way I and my neighbours want it. However, a lower (or nil) LVT would not, I think, ever be able to compensate for the parachuting of problem families (or worse) into the neighbourhood. This lack of a true compensation mechanism is one of the basic weaknesses of LVT (unless a negative LVT is contemplated).
However, what Oswald seems to be advocating is "f**k the home owners - they're only selfish NIMBY's after all". The state (and private developers) should apparently be empowered to dump any old housing and any old occupants anywhere the state (or the developer) wants. It's not as if we haven't seen this before. After all, Mandelson's grandfather was proud - and reckoned it his greatest achievement - that a pre-war Labour LCC "built" the Conservatives out of parts of London. Oswald believes that reducing home ownership may (but may not) improve employment. He may be correct but he is an economist: tsunamis thereby created in the non-economic field don't disturb him. There may be strong arguments for LVT: this isn't one of them.
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