Manufacturing decline and house price volatility

Using a new dataset of all Swedish housing transactions over the 2009-2017 period, we find that manufacturing's share of employment is positively associated with house price growth volatility and negatively associated with risk-adjusted capital gains. Both effects appear to be related to manufacturing's impact on firm concentration and employment volatility. Moreover, they imply that the manufacturing decline since 1970 could account for a 35% reduction in house price volatility.