Housing and the Regional Economy
In the 1990s, John became interested in links between housing and the wider economy. Cameron and Muellbauer (1998) studied regional migration and commuting in the UK, revealing multiple influences of the housing market.
Earlier research ignoring the role of housing had shown remarkably small effects of earnings and unemployment differentials on migration in the UK. However, when the effect of housing cost differentials and expectations of relative house price appreciation were included, relative unemployment rates and real earnings became far more relevant for migration.[212]Cameron and Muellbauer (2001) examined the determination of UK regional unemployment and earnings differentials, revealing the heterogeneous influence of house prices on different types of employment. This threw doubt on the view that higher owner-occupation is a major cause of higher unemployment, as suggested by Blanchflower and Oswald (2013). Papers by Cameron et al. (2006a, b) became key inputs into the then British government’s “Housing Affordability Study”. The main elements of a general equilibrium model were assembled so that, for example, the impact of earnings growth on regional housing affordability could be simulated, taking account of feedbacks via migration and commuting. This work could form the basis of a model of “regional evolutions” for the UK (i.e. how regions evolve economically and interact with each other and the national economy), which Blanchard and Katz, in a famous 1992 paper, had suggested needed to be analysed in a general equilibrium system. Sadly, Gavin Cameron, a sufferer from cystic fibrosis, died in 2007. In 2008, Muellbauer and Murphy guest-edited an issue of the Oxford Review of Economic Policy on “Housing and the Economy”, contributing a detailed assessment that surveyed the many interactions between housing and the economy.
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