Labour Market Participation and Mortgage Related Borrowing Constraints

This paper analyses the relationship between female labour market participation and mortgage commitments in a life-cycle set up. In particular, it examines whether a mortgage qualification constraint has any effect on female labour market participation. This is done by conditioning on the mortgage decision in a labour market participation equation for married women. Endogeneity of the mortgage variable is tested using house price data. Panel data from the British Household Panel Study is used in order to control for unobserved heterogeneity in participation. Acknowledgements: I wish to thank my supervisors Richard Blundell and Ian Preston for their continuous help and support. I am also grateful to Orazio Attanasio, James Banks, Laura Blow, Martin Browning, Ian Crawford, Hamish Low, Tullio Jappelli, Frank Windmeijer for their useful comments and to Erich Battistin, Emla Fitzsimons, Elena Martinez Sanchis, Lars Nesheim, Zoe Smith and Matthew Wakefield for their help at various stages. I would also like to thank seminar participants at the 2003 European Society for Population Economics conference, the 2003 British Household Panel Survey conference and the 2003 European Economic Association conference for their comments and suggestions. Financial support from the ESRC Centre for the Microeconomic Analysis of Fiscal Policy at the IFS, is gratefully acknowledged. The data used in this dissertation were made available through the UK Data Archive. The data were originally collected by the ESRC Research Centre on Micro-social Change at the University of Essex, now incorporated within the Institute for Social and Economic Research. Neither the original collectors of the data nor the Archive bear any responsibility for the analyses or interpretations presented here. All errors are my own. e-mail address: [email protected]