Does owner-occupancy increase the unemployment rate? A critical assessment of the Oswald effect

Sammanfattning: The research community has been divided ever since Oswald (1996) first launched his finding of a positive relationship at the aggregate level between the unemployment rate and the share of owner-occupancy. Micro researchers question the finding altogether since numerous studies indicate that individual homeowners have better labor market outcome than tenants. This thesis questions the findings at the macro level and shows that the econometric techniques most commonly employed neglect the dynamics of the system as well as the endogeneity of the variables analyzed. The results from the OIRF analysis give support to the skeptics; the relationship is reversed in the short run and insignificantly positive in the long run. Hence, there does not seem to be a general contradiction for Swedish policy makers between promoting access to the housing market and advocating for reduced unemployment rates.