Home-ownership and unemployment: a French test of the Oswald hypothesis

In a series of papers, Andrew Oswald (1996, 1999) has argued that a major explanation of unemployment in Oecd countries is the increase of home-ownership. In this work, we try to test the Oswald Hypothesis for French employment areas. We analyse the effect of home-ownership rate and other residential status on unemployment rate. We use a generalized spatial two-stage least squares (Gs2sls) procedure in order to account for two forms of spatial dependence in our data (a spatial autocorrelation in the dependent variable and a spatial autocorrelation in the error terms), but also endogeneity of residential status. Our findings are in contradiction with the Oswald hypothesis. Indeed, all other things being equal, a high home-ownership rate is associated with a low unemployment rate.