Housing Stock and Capital Goods (Chapter 12)

Until now, the analysis focused on housing tenure (owner-occupancy/ home-ownership and tenancy/lease). However, the housing stock is a fundamental infrastructure also for firms. Indeed, plants, offices, commercial premises and warehouses are part of the firm’s capital goods. This chapter, therefore, looks at the housing stock as a part of capital goods of firms and addresses the important and evergreen growth topic. This chapter also shows that a basic search and matching model of the labour market can easily explain both the capitalization effect and the process of creative destruction.