Labour Mobility, Housing Prices and Unemployment: a Swedish perspective

Abstract: The importance of the housing market and labour market has long been recognized and explored in macroeconomics. In this thesis the linkages between these two markets are highlighted and examined. In this paper the particular relationship that will be explored is that of rising housing costs and unemployment, thereby adding to the small number of papers observing rising costs as opposed to falling prices. The results generally perform as expected with significant results. Most of the variables of interest indicated a positive relationship between rising housing costs and unemployment, however one of the variables produced a surprising result and indicated that there was a negative relationship. Despite this result, there is sufficient evidence through theoretical framework and estimation to infer that rising housing costs act as a deterrent for relocation leading to labour mobility problems which can exacerbate or prolong unemployment.