This paper investigates the impact of shocks in the unemployment rate on household formation. Prior research has shown that negative economic shocks reduce household formation, but does not inform how long the declines in household formation will persist. Using time series data from 1975 to 2011, we examine how households respond to unemployment rate shocks and estimate the length of time it takes for households to return to its original level in a vector autoregressive model. The results demonstrate that household formation falls in the quarter after unemployment increases, and that it can take up to 10 quarters to return its previous level. While this is a substantial length of time, one implication of these results is that even a permanent increase in the unemployment rate will not permanently affect housing formation in the long run.
The Journal of Real Estate Finance and Economics – Springer Journals
Published: Dec 11, 2014
It’s your single place to instantly
discover and read the research
that matters to you.
Enjoy affordable access to
over 18 million articles from more than
15,000 peer-reviewed journals.
All for just $49/month
Query the DeepDyve database, plus search all of PubMed and Google Scholar seamlessly
Save any article or search result from DeepDyve, PubMed, and Google Scholar... all in one place.
All the latest content is available, no embargo periods.
“Whoa! It’s like Spotify but for academic articles.”@Phil_Robichaud