The Effect of Homelessness on Employment Entry and Exits: Evidence from the Journeys Home Survey
Melbourne Institute Working Paper No. 01/18
Date: February 2018
This paper provides new insights into the association between homelessness and poor employment outcomes by examining how homelessness affects employment transitions. The study uses longitudinal data from the Journeys Home survey and methods that address concerns related to reverse causality and endogenous selection into homelessness. The findings reveal that low levels of employment among homeless people can be attributed primarily to their higher probabilities of exiting employment. The negative association between homelessness and employment entry is much weaker in both magnitude and significance. This finding contrasts with what one would expect given the perception in the literature, i.e. that the difficulty of finding employment is a major contributing factor behind the poor rates of employment among homeless people. The significant positive association between homelessness and the probability of exiting employment seems to be mainly driven by unobserved person-specific characteristics, which increase a person’s chances of being homeless and of leaving employment. Once the effect of these unobserved confounding characteristics is considered, homelessness per se has no significant impact on either employment entry or exit.