12:00-12:45

Mortgage Finance and Technological Change
Robin Doettling (University of Amsterdam)

Abstract: We explore how house prices evolve under technological progress, when housing serves for consumption as well as store of value. Technological change leads to human capital substituting physical capital and manual labor. As firms have less tangible collateral to pledge for external finance, lower business demand for credit leads to a decline in interest rates. Over time savings are redirected to mortgage credit with houses as collateral, leading house prices to rise in real terms. The combination of growing wage inequality and mortgage credit leads to high household leverage for low-skill workers, increasing default rates and foreclosures. Restraining mortgage borrowing is more effective than subsidies to limit mortgage defaults, by containing household leverage and house price appreciation. A general equilibrium effect comes from lower interest rates, supporting more physical investment and higher labor wages.

Field: Finance, Macroeconomics

13:15-14:00

Does Searching Broader Improve Job Prospects? – Evidence from variations of online search
Paul Muller (VU University Amsterdam)

Abstract: We investigate experimentally the effects of a web-based information intervention on employment prospects. We invited 300 job seekers to search for jobs in our computer facilities at the University of Edinburgh for 12 consecutive weekly sessions. They searched for real jobs using our web interface. After 3 weeks, we introduced a manipulation of the interface for half of the sample. The manipulation consisted of providing suggestions of alternative occupations to consider, based on the profile of the job seeker. These suggestions were made using background information from readily available labor market transitions data. We find that such an intervention affects job search behavior. For job seekers who are searching relatively narrowly, the intervention broadens their search and significantly improves their job interviews. This applies especially to those with several months of unemployment duration.

Field: Macroeconomics, Labor economics