I construct a general equilibrium overlapping generations model with housing
in which the labor supply decision is endogenous and financial wealth is
distinguished from housing wealth. Under the assumptions of incomplete
markets and idiosyncratic labor income risk, housing wealth and financial
wealth have different effects on the individual labor market transitions. Using
the artificial panel data obtained from the model, I estimate the effects of
financial wealth and housing wealth on the individual labor market transitions
between employment and nonemployment. I find that financial wealth has a
positive effect on the transition probability from employment to
nonemployment, but housing wealth has a negative effect on the probability.
With regard to the transition probability from nonemployment to employment,
both financial wealth and housing wealth have negative impacts. I also show
that the model implications are consistent with the data from the Korean Labor
and Income Panel Study.