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Moving to a Job: The Role of Home Equity, Debt, and Access to Credit

Using individual-level credit reports merged with loan-level data on mortgages, we estimate how mobility relates to home equity and labor market conditions. We control for constant individual-specific traits with fixed effects and find that homeowners with negative home equity move to other metropolitan areas more than other homeowners. We use a dynamic quantitative model of consumption, housing, employment, and mobility to interpret our findings. The utility gain from accepting a higher-paid job in another area is negatively correlated with home equity. The relationship between home equity and mobility in the data is well replicated by the model.

JEL codes: J61, G21, G01, D11, D12.

Key words: unemployment, mobility, mortgages, negative equity.

Suggested citation: Demyanyk, Yuliya, Dmytro Hryshko, María José Luengo-Prado, and Bent E. Sørensen, 2014. “Moving to a Job: The Role of Home Equity, Debt, and Access to Credit,” Federal Reserve Bank of Cleveland, Working Paper no. 13-05.

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