Working Paper: Real Effects of Relaxing Financial Constraints for Homeowners: Evidence from Danish Firms

Working Paper - June 2019 - No. 139

Authors De Stefani, Alessia (Danmarks Nationalbank); Moertel, Julia (University of Edinburgh)
Subject Lending; Financial regulation; Economic activity and employment
Type Working paper
Year 2019
Published 18 June 2019
We study how the introduction of interest-only mortgages in 2003 affected job creation and the skill composition of the workforce over the business cycle. The reform significantly increased household expenditure and firms reacted to this demand shock by creating jobs. These positions, however, are classified as low-skilled occupations, filled by younger and less educated workers who face earlier separations and a higher degree of unemployment ex-post.