Job Separation Risk and Home Ownership

On November 28, 2017, Tuesday, at 4:15 pm in Pettengill G65, “Job Separation Risk and Home Ownership: Evidence from Assistant Professors”  was given by Stephen Morris, Assistant Professor of Economics from Bowdoin College.

Abstract:  Expected mobility is one of the most important factors affecting the home purchase decision. We explore a unique setting — the academic job market — with characteristics that provide measurable, exogenous variation in ex ante moving rates due to institution-specific promotion-and-tenure probabilities. Using historical course catalogues, we compile a dataset recording the subsequent rank of all newly hired assistant professors at the top 50 public U.S. economics departments over the past 20 years, amounting to 1,532 individuals. We then decompose the ex ante moving rate for a newly-hired assistant professor at a given institution into the product of two factors: the hazard of job separation prior to tenure review, and the probability of not receiving tenure conditional upon staying until that year. Next, using public records, we record if, when, and how much these individuals spent on owner occupied housing during their junior career. Along with this we record and control for a number of individual-level characteristics, including salary and publishing record, and institution-specific characteristics, such as the availability of substitute job openings in the area, and real estate affordability. Finally, we study the impact of job separation risk on the decision to purchase a home. In order to account for unobservable characteristics such as risk tolerance, self-perceived tenure probability, and family ties, we also survey all assistant professors in this dataset still on the tenure track. We report results for 151 individuals who completed the survey in full.

Sponsored by the Casey Lecture Fund for Economics