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Journal Article
Keeping the house or moving for a job
Some reports have suggested that employers can?t fill job openings in some places because they can?t entice workers to move. Workers won?t move, so the story goes, when doing so will mean losing money on their homes, and this is the case for many homeowners since the housing crash. But new research shows that homeowners will move when they have a better job offer, even if they will lose money on their home when they sell it.
Working Paper
The Rise and Fall of Consumption in the 2000s
U.S. consumption has gone through steep ups and downs since the turn of the millennium, but the causes of these fluctuations are still imperfectly identified. We quantify the relative impact on consumption growth of income, unemployment, house prices, credit scores, debt, expectations, foreclosures, inequality, and refinancings for four subperiods: the ?dot-com recession? (2001-2003), the ?subprime boom? (2004-2006), the Great Recession (2007-2009), and the ?tepid recovery? (2010-2012). We document that the explanatory power of different factors varies by subperiods, implying that a ...
Working Paper
Moving to a job: The role of home equity, debt, and access to credit
Using credit report data from two of the three major credit bureaus in the United States, we infer with high certainty whether households move to other labor markets defined by metropolitan areas. We estimate how moving patterns relate to labor market conditions, personal credit, and homeownership using panel regressions with fixed effects which control for all constant individual-specific traits. We interpret the patterns through simulations of a dynamic model of consumption, housing, and location choice. We find that homeowners with negative home equity move more than other homeowners, in ...
Report
Labor market exit and re-entry: is the United States poised for a rebound in the labor force participation rate?
The U.S. labor force participation rate has declined sharply since 2007?far faster than can be explained by demographic shifts in the population. This brief analyzes the re-entry probability for individuals who exit the labor force as well as the financial demographic, and employment characteristics of these individuals. The vast majority of individuals under 45 years of age re-enter the labor market within four years of exiting; however, the re-entry rate drops substantially for 50?54 year-olds and 55?59 year-olds. Those individuals who exit the labor market appear more marginally attached ...
Report
Household formation over time: evidence from two cohorts of young adults
Residential investment accounts for an important component of U.S. gross domestic product, and traditionally plays a strong role in business cycle expansions. U.S. residential investment has improved slowly during the recovery from the Great Recession, despite a relatively strong national rebound in house prices and record low interest rates. An important determinant of residential investment is the household formation rate, which is largely driven by young adults moving out of their parents? homes after completing high school or college. New household formation can be offset when existing ...
Report
Sectoral inflation and the Phillips curve: what has changed since the Great Recession?
Using sectoral data at a medium level of aggregation, we find that price changes became less responsive to aggregate unemployment around 2009?2010. The slopes of the disaggregated Phillips curves diminished in many sectors, including housing and some services. We also document a decrease in sectoral inflation persistence, suggesting an increase in the weight of the forward-looking inflation expectation component and a decrease in the weight of the backward-looking component.
Working Paper
House prices and risk sharing
We show that homeowners are able to maintain a high level of consumption following job loss or disability in periods of rising house values. However, the consumption drop for consumers who simultaneously lose their job and equity in their houses is substantial. Using data from the Panel Study of Income Dynamics, we verify that homeowners smooth consumption more than renters, and that consumption smoothing improves when houses appreciate in the area of residence. We calibrate and simulate a model of endogenous homeownership and home-equity loans, and show that the model is able to reproduce ...
Working Paper
Consumption, credit, and the missing young
There are more young adults today with either no credit history or insufficient credit history to be scored by one of the major credit bureaus than there were before the Great Recession ? a reality that is likely an unintended outcome of the CARD Act of 2009. In regressions that include a rich set of controls, this paper shows that measures of young adults missing from credit bureau data act as a drag on state-level consumption growth. This finding seems to be driven by young individuals from more disadvantaged backgrounds having less access to credit since the act went into effect.
Working Paper
The local aggregate effects of minimum wage increases
This paper examines the effect of minimum wage changes on local aggregate inflation and consumption growth. The paper utilizes variation in state-level minimum wages across locations and finds that minimum wage increases have a relatively modest effect on both city-level inflation and spending growth over the years following the change. The most noticeable effects are for food consumed at home and away from home?industries that typically employ a large share of low-wage and minimum-wage workers. Interestingly, consumers adjust their real food consumption when minimum wages rise, suggesting ...
Working Paper
The rise and fall of consumption in the '00s
The major portion of U.S. gross domestic product (GDP) is accounted for by consumer spending, which significantly affects the business cycle. Consumer demand has been extremely volatile since 2000, especially given the booms and busts in housing values and in subprime mortgage lending. While it is well-established that housing net worth, credit availability, and household debt levels help to explain changes in consumer spending, the roles played by other potential determinants of consumption are not well identified or understood. This paper uses county-level data and a multiple-regression ...