To start with individual laborer will mostly engage …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 activity.
In conclusion, Reed and Ume evaluated a link between the labor market activity and housing market. They also actively assess a model with two different setting that looks at both markets. The first setting analyzes the labor market’s activities and in the long run the housing market. The second setting analyzes the housing market influenced upon the labor market and vice versa. They indicate that policies that aim at the labor market will turn be carry over into the housing