Labor supply response to house price shocks: Evidence from Japan
This paper examines to which extent the labor supply of homeowners aged 40 years or over responds to unanticipated shocks to house prices in Japan. Our findings suggest that only people in their 60s or over respond to house price shocks. They try to remain in the labor force but tend to reduce their working hours. Specifically, we find that a 10 percent increase in house prices leads to a 14 minute reduction in weekly working hours for elderly women and a 21 minute reduction for elderly men. We also find that women respond to house price shocks at a younger age than men. Women decrease their weekly working hours from the age of 60, while men start to reduce their working hours from the age of 65. The small and late response to a positive house price shock among the elderly may reflect the peculiarities of Japan's housing and labor markets.
