Public employment and homeownership dynamics

Using micro data from the Italian Survey on Household Income and Wealth, we examine a previous undocumented dimension in which outcomes between public- and private-sector workers differ: homeownership. We show that public employees are more often homeowners than private employees are, and that this difference has widened after the Great Recession. We disentangle the effect of workers’ characteristics from the role of public-sector jobs characteristics, such as higher wages or job security, on homeownership differences across sectors. We find that demographic characteristics are important in explaining the historical difference, but cannot explain the widening gap across sectors. The higher job security, reflected in higher share of permanent contracts in the public sector in Italy, explains most of the divergence among sectors after the Great Recession. Part of the mechanism works through the financial system, with permanent contracts workers being less likely to be refused a loan.