Young adults navigating a housing maze with job applications scattered around.

The Unexpected Twist in the Youth Job Crisis: Why Housing Policies Matter More Than You Think

Lena Voss in Business & Economy July 2025 • 4 min read.

"Could stringent housing market regulations be the secret culprit behind young adults' struggles in the job market? New research uncovers a surprising link."

Finding a stable job, achieving financial independence, and moving out of the parental home are milestones that many young adults aspire to. However, in many European countries, these steps are increasingly delayed, leading to what some call a 'youth employment crisis.' Conventional wisdom often points to rigid labor market regulations and lack of job protection as primary drivers, but recent research suggests that housing policies play a surprisingly significant role.

A groundbreaking study by Antoine Bonleu, Bruno Decreuse, and Tanguy van Ypersele delves into the complex interplay between job protection, housing market regulations (HMR), and the challenges faced by young people. The research reveals that stringent HMR can inadvertently worsen employment prospects for young adults and fuel a persistent demand for job security, even when it seems counterintuitive.

This article unpacks the key findings of their research, offering a fresh perspective on the youth employment landscape and highlighting the unexpected ways in which housing policies can shape career pathways.

The Housing-Job Market Connection: How Rental Regulations Impact Employment

Young adults navigating a housing maze with job applications scattered around.

The core of the study's argument lies in the idea that when rental markets are heavily regulated, landlords face a significant challenge in assessing the risk of rent default. In such environments, landlords often rely on employment status as a key indicator of an applicant's ability to pay rent consistently. This is where job protection comes into play.

Protecting long-term jobs offers a signal to landlords, suggesting that workers in these positions are more likely to maintain a steady income stream. This, in turn, increases their chances of securing housing in a competitive rental market. The researchers built a model to demonstrate this dynamic, highlighting how non-employed workers might paradoxically demand job protection, even as unemployment and short-term job opportunities rise.

Reduced Rental Market Size: Strict housing regulations limit the availability of rental properties, making it harder for workers to move for job opportunities.
Screening Based on Job Stability: Landlords prioritize applicants with stable, protected jobs due to the lower risk of rent default.
Increased Demand for Job Protection: Workers, especially young adults, see job protection as a way to improve their chances of securing housing.

The study also sheds light on the correlation between youth demand for job protection and HMR in OECD countries, reinforcing the notion that the two are intertwined. The research suggests that reforming housing markets could be a crucial step in addressing the youth employment crisis and reducing the perceived need for rigid job protection measures. This challenges the conventional focus solely on labor market reforms and encourages a more holistic approach to policy-making.

Reforming Housing, Empowering Youth

The research by Bonleu, Decreuse, and van Ypersele offers a valuable contribution to the ongoing debate about youth employment and the role of government policies. By highlighting the often-overlooked connection between housing market regulations and job security, the study encourages a more nuanced and integrated approach to addressing the challenges faced by young adults. Reforms aimed at creating more accessible and flexible housing markets could not only improve housing affordability but also unlock new opportunities for young people to thrive in the job market.

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Everything You Need To Know

What is the primary argument presented in the study by Bonleu, Decreuse, and van Ypersele regarding the youth employment crisis?

The study posits that stringent housing market regulations (HMR) significantly contribute to the youth employment crisis. These regulations inadvertently worsen employment prospects for young adults by impacting the rental market. The research highlights the interplay between HMR, job protection, and the challenges young people face in securing employment and housing. It challenges the conventional focus solely on labor market reforms, advocating for a more comprehensive approach to policy-making that considers the crucial role of housing policies.

How do stringent Housing Market Regulations (HMR) affect young adults' job prospects and their demand for job protection?

Stringent HMR limit the availability of rental properties, making it more difficult for workers to move for job opportunities. In regulated rental markets, landlords prioritize applicants with stable, protected jobs due to the lower risk of rent default. Consequently, young adults perceive job protection as a crucial factor in securing housing, leading to an increased demand for it. This dynamic, as demonstrated by the researchers, creates a situation where even as unemployment or short-term opportunities rise, the perceived need for job security persists, driven by the need for stable housing.

What are the key factors contributing to the housing-job market connection as revealed by the study?

The study identifies several key factors. First, reduced rental market size, caused by strict housing regulations, limits the availability of rental properties. Second, landlords heavily rely on job stability when screening applicants because of the lower risk of rent default. Third, the demand for job protection increases among workers, especially young adults, as they perceive it as a means to improve their chances of securing housing. These factors are intertwined, shaping the employment landscape for young adults.

How does the study by Bonleu, Decreuse, and van Ypersele challenge conventional wisdom about the youth employment crisis?

The research challenges the conventional focus on rigid labor market regulations and the lack of job protection as the primary drivers of the youth employment crisis. By demonstrating the significant role of housing policies, the study encourages a more nuanced and integrated approach to policy-making. It suggests that reforming housing markets could be a crucial step in addressing the crisis and reducing the perceived need for rigid job protection measures, shifting the focus beyond purely labor market reforms.

In what ways could reforming housing markets benefit young adults and the job market, according to the research?

Reforming housing markets, particularly by making them more accessible and flexible, could unlock new opportunities for young people. It could improve housing affordability and reduce the link between job stability and housing access. The study suggests that these reforms could create a more dynamic job market, allowing young adults greater mobility and the ability to pursue opportunities without the constraints imposed by stringent HMR and the resulting need for job protection. This also helps alleviate the challenges young adults face in achieving financial independence and moving out of their parental homes.