Housing And Unemployment: The Search For The American Dream By Robert Reed And Ejindu Ume

1049 Words 5 Pages
In the clause, “Housing and unemployment: The search for the “American Dream”, by Robert Reed and Ejindu Ume evaluated that there is an important link between labor market actives and the housing market. The two authors will also compose a model of search and bargaining over both markets. They also highlight facts that argue that housing costs and friction in the housing market can hold an immense impact upon both markets. This connection can be seen in the individual worker’s desire to eventually buy their own house. They will as well assess the results of dismissing the connection between both markets. The sources suggested that the “American Dream” is a big piece of the labor market.
To start with individual laborer will mostly engage
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In this environment, the unemployed will spend their time searching for the ideal job opening. Upon entering the labor market, the individual will begin to discuss wage rates. When earning an income, the individual can also begin to search for a home and they purchase the own home. According the Reed and Ume, there “model introduces an important connection between the housing market condition and labor market activity- the value of finding a job extends beyond labor income, it also includes the discounted benefit of access to housing,” (Reed. R., Ume. E., 2016). Basically, they are showing with their model that connection between both markets and they also show that housing market is important part that motivates the labor market …show more content…
When a person finds suitable home, then bartering over the price will begins. According the Reed and Ume that “A worker’s surplus from home ownership depends on wages, the expected length of time that they will expected length of time that they will remain in the home, and the utility from home ownership. The seller’s surplus from finding a buyer depends on the sale prices of the home and the amount of time it would take to find an alternative buyer,” (Reed, R., Ume, E., 2016). They are pointing out that the buyer’s surplus will depend on their wages at the job and the length they are in the new home. In turn the seller’s surplus comes from the finding a buyer, sale price of the home and the amount of time it would take to find another buyer. It also means that the state of the labor market’s wages and contributions of workers can also affected the prices and the tightness within the housing market. Consequently, policies are aim at the labor market would carry on to the housing market

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