Mortgage modification policies slow employment recovery, economists say
September 15, 2011 By Meg Sullivan
In a new study, UCLA economists estimate that means-tested mortgage modifications, which significantly reduce mortgage payments to households whose incomes have declined, have raised the unemployment rate by approximately 0.5 percentage points. In the absence of these policies, they say, there would be about 750,000 more jobs filled, and that output and income would be about $140 billion higher than it is.
Means-tested mortgage modifications substantially reduce the cost of staying in a home by reducing mortgage payments, with the payment reduction based on the household's current earnings; this can include cases in which the borrower's income is limited to unemployment benefits. These policies, the researchers argue, reduce incentives for workers to relocate to areas with lower unemployment rates and better job-finding prospects.
The findings could help policymakers better tackle the current unemployment problem by highlighting the potentially negative effects of means-tested modifications; policies could instead be directed toward solutions that do not reduce incentives for individuals to move to better labor markets.
More information: The study is currently a National Bureau of Economic Research working paper and will appear in the fall edition of the Cato Journal.
Provided by
University of California Los Angeles
-
From lemons to lemonade: Reaction uses carbon dioxide to make carbon-based semiconductor,
32 comments
-
Thioridazine kills cancer stem cells in human while avoiding toxic side-effects of conventional cancer treatments,
3 comments
-
SpaceX private rocket blasts off for space station (Update),
42 comments
-
Climate scientists say they have solved riddle of rising sea,
31 comments
-
SpaceX capsule has 'new car' smell, astronauts say (Update),
4 comments
-
Consumption rivalry
May 25, 2012
-
Bilateral trade between all countries
May 24, 2012
-
Is the economic foundation of social media in jeopardy?
May 20, 2012
-
Psychology: Rosenthal and Hawthorne Effect
May 15, 2012
-
Is GDP and National Income the Same Thing?
May 13, 2012
-
Difference between hourly wage and real GDP per hour worked?
May 12, 2012
- More from Physics Forums - Social Sciences
More news stories
Change in developmental timing was crucial in the evolutionary shift from dinosaurs to birds: study
At first glance, it's hard to see how a common house sparrow and a Tyrannosaurus Rex might have anything in common. After all, one is a bird that weighs less than an ounce, and the other is a dinosaur that ...
Other Sciences / Archaeology & Fossils
3 hours ago |
5 / 5 (2) |
0
|
Social welfare cuts ultimately come with heavy price, researchers say
(Phys.org) -- Slashing government funding for Medicaid, food stamps and other programs that serve the poor – while politically popular with some lawmakers and many conservatives – may do more harm ...
Other Sciences / Social Sciences
May 24, 2012 |
4.3 / 5 (16) |
152
Ancient Bethlehem seal unearthed in Jerusalem
Israeli archaeologists have discovered a 2,700-year-old seal that bears the inscription "Bethlehem," the Israel Antiquities Authority announced Wednesday, in what experts believe to be the oldest artifact ...
Other Sciences / Archaeology & Fossils
May 23, 2012 |
3.5 / 5 (14) |
24
Oldest Jewish archaeological evidence on the Iberian Peninsula
German archaeologists of the Friedrich Schiller University Jena found one of the oldest archaeological evidence so far of Jewish Culture on the Iberian Peninsula at an excavation site in the south of Portugal, ...
Other Sciences / Archaeology & Fossils
May 25, 2012 |
4.2 / 5 (6) |
12
Dollars and sense: Why are some people morally against tax?
As the U.S. presidential election campaigns heat up, the economic debate is dominated by bailouts, austerity and, inevitably, taxation. Now a new study published in Symbolic Interaction asks why tax is such an important issue ...
Other Sciences / Social Sciences
May 23, 2012 |
3 / 5 (2) |
12
Land and sea species differ in climate change response: study
(Phys.org) -- Marine and terrestrial species will likely differ in their responses to climate warming, new research by Simon Fraser University and Australia’s University of Tasmania has found.
'Unzipped' carbon nanotubes could help energize fuel cells, batteries
Multi-walled carbon nanotubes riddled with defects and impurities on the outside could replace some of the expensive platinum catalysts used in fuel cells and metal-air batteries, according to scientists at ...
T cells 'hunt' parasites like animal predators seek prey, study shows
By pairing an intimate knowledge of immune-system function with a deep understanding of statistical physics, a cross-disciplinary team at the University of Pennsylvania has arrived at a surprising finding: T cells use a movement ...
Computer model used to pinpoint prime materials for efficient carbon capture
When power plants begin capturing their carbon emissions to reduce greenhouse gases – and to most in the electric power industry, it's a question of when, not if – it will be an expensive undertaking.
Almost half of new vets seek disability
(AP) -- America's newest veterans are filing for disability benefits at a historic rate, claiming to be the most medically and mentally troubled generation of former troops the nation has ever seen.
Nvidia trumpets Tegra 3 phone design wins for 2012
(Phys.org) -- Nvidia’s competitive war paint has a name, Tegra 3. On the heels of Nvidia announcements about lowering costs of its Tegra 3 processors and Nvidia-enabled tablets running Android Ice Cream ...
Sep 15, 2011
Rank: not rated yet
Sep 16, 2011
Rank: not rated yet
This sounds like it came from someone who doesn't want mortgage modifications. Just because jobs dried up in one area doesn't mean they picked up in another area. There has been overall job reduction all over the U.S. as multinationals and huge corporations dump jobs all over. How many failed mortgages will happen because of the 40,000 jobs B of A is cutting?
Moving from the city they have lived in for years is not the answer. The answer is to stop cutting jobs. But multinationals don't see it that way.
And how many home loans are modified for the unemployed? I'd like to see the figures on that. How many unemployed actually still have homes of their own? I would think they were the first to lose their mortgages because of lack of payment.
I hate the idea that people are expected to leave their home towns once they lose their mortgages.