A young adult looking frustrated at a maze representing housing and job challenges.

Locked Out: How Job Protection and Housing Policy Impact Young Adults

Kai Mendoza in Business & Economy August 2025 • 4 min read.

"A new study reveals the surprising link between strict rental regulations, job security, and youth unemployment, offering insights into Europe's economic challenges."

Young adults in Europe face a tough economic landscape marked by high unemployment, unstable job prospects, and delayed independence. It's tempting to point fingers at labor and housing market policies, but the full picture is more complex. A recent study sheds light on the intricate relationship between job protection, housing regulations, and the challenges faced by young people entering the workforce.

Conventional wisdom suggests that loosening employment protection legislation (EPL) and housing market regulation (HMR) would boost employment and mobility. EPL is often seen as a barrier to entry, limiting vacancies and access to long-term positions. HMR, on the other hand, is accused of shrinking the rental market, hindering workers' ability to move for better opportunities. However, the youth often resist reforms aimed at weakening job security. Why?

The study suggests a surprising reason: in countries with strict rental regulations, job protection acts as a second-best solution, signaling a worker's reliability to landlords. This article explores this dynamic, revealing how seemingly unrelated policies can have unintended consequences on the lives of young adults.

The Unexpected Link: Job Security as a Signal

A young adult looking frustrated at a maze representing housing and job challenges.

Imagine a scenario where landlords need to be extra cautious about who they rent to. Strict housing market regulations make it difficult to evict tenants, meaning landlords face a significant risk if a tenant defaults on rent. In this environment, landlords need a way to assess an applicant's reliability. That’s where job protection comes in. Having a stable, protected job becomes a signal of trustworthiness.

When regular jobs are protected, firms become more selective in their hiring processes. This selectivity, in turn, makes a long-term contract a valuable signal for landlords. It indicates that the worker has met a higher standard and is more likely to be a reliable tenant. As a result, young workers may paradoxically support job protection, even though it might limit their immediate employment opportunities. They see it as a way to improve their chances in the rental market.

The key takeaways are:

HMR Impact: Strict rental rules make landlords risk-averse.
Job Protection as Signal: Stable jobs signal reliability to landlords.
Youth Support: Young workers favor job security for rental access.
Policy Paradox: Loosening job protection could hurt rental prospects.

This theory helps explain why support for labor market reforms is often weak among young people, even in countries with high youth unemployment. They understand that in a heavily regulated rental market, a protected job offers a significant advantage. Removing that protection could make it even harder to find housing, undermining their efforts to become independent.

Rethinking the Solution

The study suggests that reforms should focus on the housing market. By reducing the burden on landlords and making it easier to manage rental properties, policymakers can decrease the need for job protection as a screening mechanism. This could involve streamlining eviction processes, offering insurance against rent default, or providing incentives for landlords to rent to younger, less-established workers. Ultimately, creating a more flexible and accessible rental market can help young adults achieve economic independence without sacrificing job security.

About this Article -

This article was crafted using a human-AI hybrid and collaborative approach. AI assisted our team with initial drafting, research insights, identifying key questions, and image generation. Our human editors guided topic selection, defined the angle, structured the content, ensured factual accuracy and relevance, refined the tone, and conducted thorough editing to deliver helpful, high-quality information.See our About page for more information.

This article is based on research published under:

DOI-LINK: 10.1111/jpet.12323, Alternate LINK

Title: Job Protection, Housing Market Regulation, And The Youth

Subject: Economics and Econometrics

Journal: Journal of Public Economic Theory

Publisher: Wiley

Authors: Antoine Bonleu, Bruno Decreuse, Tanguy Ypersele

Published: 2018-10-31

Everything You Need To Know

According to a recent study, how do strict rental regulations and job security policies affect young adults seeking housing?

The study reveals that in regions with stringent Housing Market Regulations (HMR), Employment Protection Legislation (EPL) paradoxically assists young adults. Because landlords face difficulties evicting tenants under strict HMR, a stable job, guaranteed by EPL, becomes a signal of reliability. Landlords view this job security as an indicator that the applicant is a dependable tenant who can consistently pay rent.

Why might young people resist reforms that weaken job security, even if those reforms could potentially create more job opportunities?

Conventional wisdom suggests that loosening Employment Protection Legislation (EPL) and Housing Market Regulation (HMR) would boost employment and mobility. However, the youth often resist reforms aimed at weakening job security because in countries with strict rental regulations, job protection acts as a second-best solution, signaling a worker's reliability to landlords. This is because strict housing market regulations make it difficult to evict tenants, meaning landlords face a significant risk if a tenant defaults on rent. In this environment, landlords need a way to assess an applicant's reliability. That’s where job protection comes in.

What specific changes to housing market regulations would help young adults secure housing without needing job protection as a signal of reliability?

The study suggests that reforms should primarily target Housing Market Regulations (HMR). By easing the burden on landlords—through measures like streamlining eviction processes or offering rent default insurance—policymakers can diminish the reliance on Employment Protection Legislation (EPL) as a screening tool. This approach aims to foster a more flexible rental market, enabling young adults to secure housing without depending on strict job security.

How does the selectivity of firms hiring practices impact long term contracts and how do landlords view this?

When Employment Protection Legislation (EPL) makes it harder to fire employees, companies tend to be more careful about who they hire. This careful selection process means that getting a long-term job becomes a strong signal to landlords. It tells them that the worker has met high standards and is likely to be a reliable tenant. As a result, young workers might actually support keeping job protection in place, even if it limits their immediate job options, because it helps them in the rental market.

What are the potential consequences of loosening job protection laws without reforming rental market regulations?

If policymakers loosen Employment Protection Legislation (EPL) without addressing Housing Market Regulations (HMR), it could unintentionally harm young adults. While loosening EPL might create more job opportunities, it simultaneously weakens the signal of reliability that job security provides to landlords. This could make it even harder for young adults to find housing, undermining their efforts to achieve independence. Therefore, reforms need to be carefully balanced to avoid unintended negative consequences.