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Title: House Prices and Employment Reallocation: International Evidence

Author(s): Olympia Bover and Juan F Jimeno

Publication Date: October 2007

Keyword(s): House prices, labour demand and sectoral reallocation of labour

Programme Area(s): Labour Economics

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 labour 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 labour 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 labour demand with respect to house prices is broadly similar across countries.

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Bibliographic Reference

Bover, O and Jimeno, J. 2007. 'House Prices and Employment Reallocation: International Evidence'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=6543