Homeownership & Unemployment : A test of the Oswald hypothesis in Sweden

Sammanfattning: The importance of a well-functioning housing market has been proposed for long within economics, economic geography and urban planning.  A high mobility on the housing market most likely positively affects the dynamics of the labor market, a dynamic important for economic growth. Mobility defined as the link between the worker and the workplace in terms of transportation and housing are most likely essential components of a dynamic and well-functioning labor market. The Oswald hypothesis states that positive relationship between homeownership and unemployment exists, the lower mobility in the homeownership housing stock compared to the rental housing stock affects labor market mobility in a negative way which can be noted if European countries are compared. My thesis explores this relationship in a Swedish context by mobilizing a quantitative approach with aggregate data on municipal level ranging from 1998 to 2013. The Swedish housing market is in a deregulation process since 1992, a conversion process from public rental housing to homeownership co-op apartments has taken place and public policies now favor homeownership over renting. Municipal data on unemployment, homeownership of apartment, rental tenant and control variables for economy and personal characteristics are applied in Pooled OLS, random effects and fixed effects regression models. The results from the Pooled OLS and the Random effects model confirms the positive relationship proposed by Oswald for homeownership of apartment but not for homeownership of detached housing. Also rental tenant show a positive relationship. The results from the fixed effect estimation rejects the hypothesis altogether and show a negative relationship.