Unemployment Insurance as a Housing Market Stabilizer
Страхование по безработице как стабилизатор рынка жилья
2018-01-01
SCID: 54.1/4tp7rx2t
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Great Recessionforeclosure preventionhousing market stabilizationmortgage defaultunemployment insurance
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Abstract (AI)
This paper studies the impact of unemployment insurance (UI) on the housing market. Exploiting heterogeneity in UI generosity across US states and over time, we find that UI helps the unemployed avoid mortgage default. We estimate that UI expansions during the Great Recession prevented more than 1.3 million foreclosures and insulated home values from labor market shocks. The results suggest that policies that make mortgages more affordable can reduce foreclosures even when borrowers are severely underwater. An optimal UI policy during housing downturns would weigh, among other benefits and costs, the deadweight losses avoided from preventing mortgage defaults. (JEL D14, E32, G21, J65, R31)
Key Findings
1
Optimal UI policy during housing downturns should account for deadweight losses avoided by preventing mortgage defaults.
2
Policies that make mortgages more affordable can reduce foreclosures even when borrowers are severely underwater.
3
UI expansions during the Great Recession prevented more than 1.3 million foreclosures across the United States.
4
Unemployment insurance helps unemployed homeowners avoid mortgage default by providing income support during labor-market disruptions.
5
Unemployment insurance insulated home values from labor-market shocks, stabilizing housing markets during downturns.
Research Object
The US housing market, particularly unemployed homeowners with mortgages during housing downturns
Research Subject
the effect of unemployment insurance generosity on mortgage default, foreclosures, and home values during labor-market and housing downturns
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2018-01-01
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