UC Irvine

This dissertation will study how frictions in labor and housing markets affect outcomes in each market since labor markets and housing markets are highly frictional. The first study empirically analyzes the role that information friction plays in the housing tenure choice when households move to a new location. The results show that information friction reduces the likelihood of homeownership. The second study theoretically and quantitatively analyzes the role that search friction plays in the labor market, in particular, in the Great Divergence phenomenon. I find that the search friction in the labor market moderates the Great Divergence and provides more incentive for low-skill workers to move to productive locations. The third study examines the consequences of rent control policies on the frictional rental housing market in a search and matching framework. The model suggests that an increase in productivity growth rate would reduce the optimal occupancy duration and raise the vacancy rate. In contrast, an increase in the eviction cost would have the opposite effect.