Household Leverage and Labor Market Outcomes : Evidence from a Macroprudential Mortgage Restriction
| Autor: | Kabaş, Gazi, Roszbach, Kasper |
|---|---|
| Jazyk: | angličtina |
| Rok vydání: | 2021 |
| Předmět: |
J21
macro prudential policy Job Displacement jel:E21 Job Search jel:G51 jel:J21 Macroprudential Policy jel:G21 household leverage Samfunnsvitenskap: 200::Økonomi: 210::Samfunnsøkonomi: 212 [VDP] Household Leverage job search JEL: E21 JEL: G51 household debt ddc:330 job displacement G21 Household Debt JEL: J21 G51 health care economics and organizations E21 JEL: G21 |
| Popis: | Does household leverage matter for worker job search, matching in the labor market, and wages? Theoretically, household leverage can have opposing effects on the labor market through debt-overhang and liquidity constraint channels. To test which channel dominates empirically, we exploit the introduction of a loan-to-value ratio restriction in Norway that exogenously reduces household leverage. Focusing on a sample of displaced workers who bought a house before losing their jobs due to mass layoffs, we find that a reduction in leverage raises the subsequent wages of these workers. Lower leverage enables workers to search longer, find jobs in higher-paying firms, and switch into new occupations and industries. The positive effect on wages is persistent and more pronounced for young and highly-educated workers who are more likely to benefit from the effects of a reduction in leverage on job search. Our results indicate that in addition to reducing financial stability risks, policies limiting household leverage can improve workers’ labor market outcomes. |
| Databáze: | OpenAIRE |
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