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Professor Andrew Oswald of the University of Warwick wrote a paper that was prominently featured in Steven Landsburg’s latest book, More Sex is Safer Sex. Oswald noticed that around the world, home ownership rates and unemployment rates have a strong positive relationship (he in fact believes that home ownership causes unemployment). Read the chapter for the details, it is interesting throughout.

I was curious to see if, in a cross-section, this relationship held for the states in America. The data plotted below show for the 50 US states and the District of Columbia, how unemployment rates and homeownership rates related as of December 2007. In this raw data set, if there is any relationship at all, it appears to be opposite of what Oswald observes for the nations of the world. Of course much analysis needs to be done to say anything at all about this chart (and perhaps it makes more sense to assemble a panel data set on the matter), but on its face, it seems to be telling a different story.

Is there a quick and dirty explanation that might reconcile the difference? My priors indicate that it has something to do with labor mobility in the US among those that do not own homes (or even those that do – it is much easier and cheaper to buy and sell a home today than it was 30 years ago); but it might simply say something about the intra-country distribution differing in countries where home ownership is high (e.g. the U.S.) versus ones where it is not (e.g. Switzerland).

homeownership_unemp.gif

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