"the Labor Politics of Growth Models and the Political Economy of Housing Prices"

International political economy identifies interest rate convergence and financial market liberalization as factors behind rising housing prices.  Despite these common credit shocks, developed countries experienced heterogeneous trends in housing prices throughout the 1990s and 2000s. Turning towards a labor politics explanation of housing prices, we focus on whether the wage-setting institutions that underpin export and demand-centered growth models blunt financial liberalization’s impact on house prices via their restraining effect on incomes.  Employing both quantitative and case-study analysis, we uncover two findings. First, countries where political coalitions in the export-sector possessed veto powers over those in the non-traded sector in national wage-setting (predominant in export-led growth regimes but largely absent in domestic demand-led growth regimes) realized lower housing inflation.  Second, the impact of export-sector favoring wage-setting institutions on housing inflation in developed countries is similar to that of financial variables.  Our analysis suggests that current growth models debates can be extended to housing markets and “residential capitalism” and can contribute to discussions about housing-driven wealth inequality.