An Analysis of Housing Policy Measures Aimed at Supporting Labour Flexibility in the Czech Republic

Findings of empirical studies published in advanced countries related to the relationship between housing (tenure) and the labour market

The conclusions of the absolute majority of empirical studies published in advanced countries indicate that housing conditions, or tenure (e.g. owner-occupier, tenant, etc.), generally have a statistically significant effect on the labour market, employment and the migration of households. On the basis of the findings in these studies it is possible to conclude that at the macro-level of the relationship between housing and the labour market there is positive association between a higher proportion (or higher growth) of owner-occupied housing in a given state (or region) and a higher unemployment rate (or higher growth of unemployment during a given period of observation). However, it is not possible to examine at the macro-level the reasons for this association; this shortcoming is partly compensated by empirical studies that focus on the micro-level links between the housing market and the labour market. However, the research approaches and topics in this area are so varied and not very clarified that it is difficult to arrive at any clear-cut conclusion. Nevertheless, at the micro-level of the connection between housing and the labour market it was possible to confirm the finding that owner-occupiers are less mobile than people (households) with a different tenure (an exception is Great Britain in the 1980s, where the sector of municipal rental housing, with low, regulated rents, was "frozen" and had a negative effect on mobility), and especially less mobile than tenants in flats owned by private landlords. However, it is still impossible to confirm that the lower level of migration observed among owner-occupiers is connected with a greater likelihood that they will become unemployed or that in the case of unemployment it will take them longer to find new employment - often the very opposite statistically significant relationships were observed. The results of empirical studies to date all show that tenure has a statistically significant effect on whether households migrate for employment opportunities, but they do not agree on whether the differences in migration rates between households also results in different rates of unemployment (or differences in the duration of unemployment).

According to empirical studies, other factors that have a significant effect on household migration trends (which are partly explained by the above-mentioned conclusion about the negative link between owner-occupied housing and migration) include the degree of regional variation in the price of owner-occupied housing and the incidence of negative equity at a given point in time. Substantial regional variations in housing prices, along with the incidence of negative equity of owner-occupied housing, have a demonstrably negative effect on the migration of owner-occupier households. A situation of negative equity can even lead to an inverse relationship between local unemployment and high migration in some regions. Numerous studies have also looked at the effect of housing-market subsidies on the labour migration of households. These studies indicate clearly that financial subsidies in the rental-housing sector (especially rent controls) have a negative effect on the migration of tenant-households (Great Britain, Denmark) and result in longer periods of unemployment among members of tenant-households.