The European Central Bank has published a Working Paper by Michele Cantarella and Ilja Kristian Kavonius examining how structural labour market shifts affect households’ likelihood of holding a mortgage on their main residence. Using EU survey data and an instrumental-variables approach, the paper finds that economy-wide growth in a household’s occupation is associated with lower mortgage-holding among workers with favourable individual prospects, consistent with higher opportunity costs of committing to homeownership when mobility options improve. The analysis combines occupational growth measures from the European Union Labour Force Survey with household outcomes from the European Union Statistics on Income and Living Conditions (repeated cross-sections from 2010 to 2023, around 1.6 million labour-force observations), modelling one-year and five-year occupation growth windows. Permanent contracts and longer job tenure are, on average, associated with a higher likelihood of having a mortgage (about 2.7 percentage points and 0.4 percentage points per year, respectively), and past and expected income increases are also positively associated (about 1.5 and 2.3 percentage points). However, these effects weaken or reverse when the household’s occupation is growing: the positive association of job permanency diminishes by about 3.5 percentage points, and the effects linked to past and expected income growth fall by about 2.2 and 4.3 percentage points when occupational growth is higher, with stronger patterns over five-year growth measures. In the shift-share IV estimates, the standalone effect of occupational growth becomes statistically insignificant while the negative interaction effects remain, with robustness checks including leave-one-out growth measures and overtime-hours-based growth proxies. The paper notes that it does not represent the views of the ECB.
European Central Bank 2025-09-15
European Central Bank working paper finds occupation-wide job growth can deter mortgage-holding among job-secure households
The European Central Bank's Working Paper analyzes how structural labor market shifts impact households' likelihood of holding a mortgage. It finds that economy-wide occupational growth is linked to lower mortgage-holding among workers with favorable prospects, as improved mobility options increase opportunity costs of homeownership. The effects of job permanency and income growth on mortgage likelihood diminish when occupational growth is higher.