I think it’s a good habit to remind yourself and others about times when you’ve been wrong. Admitting error is an instinctively bitter pill to swallow, so it’s useful to practice it. Framing admission of error as a good mental habit makes you less likely to double-down and put on the blinders when you’re wrong. To be self-critical about the whole exercise, this framing also lets you pat yourself on the back a little for being wrong. A spoonful of sugar to help the medicine go down, if you will.  I’ll go first.

One area where I was wrong about this recession is the extent to which unemployment was being affected by underwater homeowners leading to decreased mobility. I’ve changed positions and been on board with those skeptical of this argument for some time but a new JEP paper from Raven Molloy, Christopher Smith, and Abigail Wozniak provides a useful occasion to draw attention to my wrongness. In short, evidence has continued to mount that housing lock-in has not been a significant cause of housing mobility declines or unemployment, and the observed decreases in mobility are a long-run trend that preceded the recession.

Here is one useful result they report:

We have estimated a number of regressions to explore possible connections We have estimated a number of regressions to explore possible connections between the housing market and mobility since 2005 or 2006. However, we found between the housing market and mobility since 2005 or 2006. However, we found no meaningful correlations between, for example, the share of homes with negative no meaningful correlations between, for example, the share of homes with negative home equity and mobility in state-level data. We also find no evidence that migration fell more in the recent period in states with larger declines in housing market tion fell more in the recent period in states with larger declines in housing market activity as measured by sales or prices.

In the end they summarize their results thusly:

In summary, we i In summary, we find little evidence that the decrease in migration since 2006 is related to demographic, socioeconomic, or cyclical factors.. The small roles for the labor and housing market should not be surprising, because the recent change migration appears to be a continuation of a downward trend rather than something specific to the recent period.

The story of housing lock-in led labor mobility declines and labor market impacts is theoretically and intuitively appealing, but it must be said that the evidence has strongly rejected it so far. If there is an argument in favor of housing lock-ing that rebuts the evidence in the JEP paper I’d be glad to read it because… well, I’d rather be right than wrong. But so far it’s not looking like this is the case.

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