Unsettled: job insecurity reduces home-ownership

We evaluate the link between job insecurity and one of the most-important decisions that individuals take: homeownership. The 1999 rise in the French Delalande tax on firms that laid off older workers produced an unexpected exogenous rise in job insecurity for younger workers. A difference-in-differences analysis of panel data from the European Community Household Panel shows that this greater job insecurity significantly reduced the probability of becoming a homeowner. This drop seems more attributable to individual preferences rather than greater capital constraints, consistent with individuals reducing their exposure to long-term financial commitments in more-uncertain environments.