House prices and regional labor markets

This paper examines some potentially significant interactions between local housing and labor markets. We use an error correction model with equations explaining the average manufacturing wage, the unemployment rate, the labor force and the average house price in an urban area. Estimates are reported for the Hartford, Houston, Fort Lauderdale and Milwaukee areas using quarterly data for the 1980s. We find some evidence that unemployment and labor force changes affect house prices and that house prices have a significant effect on the size of the labor force.