"We explore the hypothesis that high home-ownership damages the labor market"

Mombers emailed in this report which he found via the NY Times:

Our results are relevant to, and may be worrying for, a range of policymakers and researchers. We find that rises in the home-ownership rate in a US state are a precursor to eventual sharp rises in unemployment in that state. The elasticity exceeds unity: A doubling of the rate of home-ownership in a US state is followed in the long-run by more than a doubling of the later unemployment rate.

What mechanism might explain this? We show that rises in home-ownership lead to three problems:
(i) lower levels of labor mobility,
(ii) greater commuting times, and
(iii) fewer new businesses.

Our argument is not that owners themselves are disproportionately unemployed. The evidence suggests, instead, that the housing market can produce negative ‘externalities’ upon the labor market. The time lags are long. That gradualness may explain why these important patterns are so little-known.

The report is well worth a read in full. There's a typo at the top of Table 8 on page 28, it says "country" when it clearly means "county".

Problem is, the employment rate among owner-occupiers is higher than for tenants, so if a rise in homeownership levels causes unemployment (it precedes it so it is more than correlation) that unemployment hits the tenants hardest. To give an extreme example:

Year 1. 60% are owner-occupiers and 40% are tenants, there is a 10% unemployment rate and 90% of each group are in work.
Year 30. 80% are owner-occupiers and 20% are tenants, there is a 15% unemployment rate but all the owner-occupiers are in work and there is a 75% unemployment rate among tenants.

I'll tell you what I make of it:

i) The geographic mobility of owner-occupiers is lower than for tenants, but their employment rate is still higher. This is probably because owner-ocupiers are self-selecting. People with steady jobs can get a purchase mortgage much more easily. If owner-occupiers lose their jobs before they can pay it off, they are likely to become tenants again.

ii) and iii) The greater commuting times arise because of NIMBYism, as the report says. Existing homeowners in steady jobs in the area don't allow new places of work to be built, so "everybody else" has to look further and further afield.

iv) Then add to this the economic fall out of the massive debts which Home-Owner-Ism land people in. The more of people's income goes on interest payments (which are effectively pooled and shared by small groups of super-wealthy in a small number of financial centres), the less money they have to spend in the area, so the local economy (actually, everything apart from the financial centres) dries up.