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Negative home equity and job mobility

CPB Discussion Paper 345, 16 March 2017

We investigate the impact of negative home equity on job mobility. Panel fixed effects estimation is carried out by making use of Dutch administrative panel in the period 2006-2011.

To control for self-selection into negative home equity, we consider homeowners who fall into negative home equity because of an exogenous price decline in their house. We compare them to homeowners with positive equity. Negative home equity has a moderate negative effect on the probability to switch jobs. If a household plunges into negative home equity, then the head of the household is about 5.2% less likely to switch jobs.

Read also: Discussion Paper 323 'Negative Home Equity and Household Mobility: Evidence from Administrative Data'.

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