Housing Wealth and Labor Supply: Evidence From Geographically-Linked Microdata
February 2026
Working Paper Number:
CES-26-15
Abstract
This study examines the causal effect of housing wealth on labor supply using restricted geographic data from the Survey of Income and Program Participation (SIPP). The analysis employs a novel household-level instrument that measures the duration of homeowners' exposure to housing market booms driven by credit expansion in housing supply-constrained areas, leveraging cross-household variation in both the timing and location (counties) of home purchases. Housing wealth negatively affects women's labor supply, a 1% increase lowers participation by 0.098 pp, but shows no significant effect for men. This negative wealth effectamong female workers is driven primarily by childcare responsibilities and human capital investment, as it is strongest among mothers of young children and those who report child-related reasons for not working. Other potential mechanisms, such as income effects, precautionary saving, or liquidity constraints, do not seem to fully explain the negative association.
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