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The Determinants of Joint Residential and Job Location Choices: A Mixed Logit Approach

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  • Alexander Ebertz

Abstract

This paper empirically investigates the household's decision to reside and work either inthe central metropolitan area, or in the surrounding nonmetropolitan area, or to commutebetween the two regions. As economic theory suggests the location decisionamounts to trading off wages, housing costs, and commuting time. A mixed logit modelis employed to quantify the interaction effects of these economic factors in the jointresidential and job location choice. The empirical approach does not rely on the restrictiveIIA assumption and allows for arbitrary correlation patterns between coefficients.Using data from a recent survey of more than half a million German households, theelasticities of individual location choice with respect to wages, housing costs, and commutingtime are estimated. The results show that individual valuations of these factorsare of the expected signs but vary substantially in the population. Shifts in consumersurplus and in the spatial distribution of households that are associated with changes inthe determinants of location choice are calculated based on the empirical estimates.

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Bibliographic Info

Paper provided by Ifo Institute for Economic Research at the University of Munich in its series Ifo Working Paper Series with number Ifo Working Paper Nr. 82.

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Date of creation: 2009
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Handle: RePEc:ces:ifowps:_82

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Related research

Keywords: Location choice; commuting; metropolitan area; discrete choice models; mixed logit; simulation based estimation.;

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References

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  1. Thomas J. Nechyba & Robert P. Strauss, 1997. "Community Choice and Local Public Services: A Discrete Choice Approach," NBER Working Papers 5966, National Bureau of Economic Research, Inc.
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  12. Stutzer, Alois & Frey, Bruno S., 2004. "Stress That Doesn't Pay: The Commuting Paradox," IZA Discussion Papers 1278, Institute for the Study of Labor (IZA).
  13. Patrick Bayer & Fernando Ferreira & Robert McMillan, 2007. "A Unified Framework for Measuring Preferences for Schools and Neighborhoods," NBER Working Papers 13236, National Bureau of Economic Research, Inc.
  14. Thiess Buettner & Alexander Ebertz, 2009. "Spatial Implications of Minimum Wages," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), Justus-Liebig University Giessen, Department of Statistics and Economics, vol. 229(2-3), pages 292-312, June.
  15. Tabuchi, Takatoshi, 1998. "Urban Agglomeration and Dispersion: A Synthesis of Alonso and Krugman," Journal of Urban Economics, Elsevier, vol. 44(3), pages 333-351, November.
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  17. So, Kim S. & Orazem, Peter F. & Otto, Daniel M., 1998. "The Effects Of Housing Prices, Wages, And Commuting Time On Joint Residential And Job Location Choices," 1998 Annual meeting, August 2-5, Salt Lake City, UT 20779, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
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Cited by:
  1. Sharma, Ajay & Chandrasekhar, S., 2014. "Growth of the Urban Shadow, Spatial Distribution of Economic Activities, and Commuting by Workers in Rural and Urban India," World Development, Elsevier, vol. 61(C), pages 154-166.

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