Upside-down mortgages and stagnant home sales affected job mobility during the Great Recession and likely made the economic slowdown even worse than it would have been anyway.
That’s the conclusion of new research by Jennifer Brown of the University of British Columbia and David Matsa of Northwestern University.
Their finding: Job seekers in areas with depressed housing markets applied for fewer jobs that required relocation. Those jobs they did apply for tended to be for lower-level positions than job seekers from areas with more robust real estate markets.
In “Locked in by Leverage: Job Search during the Housing Crisis,” published by the National Bureau of Economic Research, Brown and Matsa concluded that fear of having to sell one’s home at a loss limited job mobility during the Great Recession.