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Compensating differentials and evolution of the quality-of-life among U.S. states

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  • Stuart A. Gabriel
  • Joe P. Mattey
  • William L. Wascher

Abstract

This paper provides the first application of the compensating differential paradigm to the evaluation of the extent and sources of evolution in quality-of-life among U.S. states. In addition to providing estimates of quality-of-life rankings for U.S. states over the 1981-1990 period, we use estimated implicit prices on place-specific amenities to calculate the contributions of various factors to evolution in the quality-of-life. Our findings indicate that the quality-of-life rankings are relatively stable across model specifications and over time for certain poorly ranked, densely-populated midwestern and eastern industrial states and for many high quality-of-life rural western states. However, we also find evidence of a substantial deterioration in the quality-of-life in some states that experienced rapid population growth during the decade, with reduced spending on highways and increased traffic congestion and air pollution accounting for the bulk of the deterioration in quality of life in these states. In contrast, states exhibiting an improvement in the quality-of-life rankings ascended for a variety of reasons, including reduced state and local government income tax burdens, improved air quality, increased highway spending, and reduced commute times.

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Bibliographic Info

Paper provided by Federal Reserve Bank of San Francisco in its series Working Papers in Applied Economic Theory with number 96-07.

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Date of creation: 1996
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Handle: RePEc:fip:fedfap:96-07

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Keywords: Quality of life ; Housing ; Wages ; Cost and standard of living;

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References

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  1. Blomquist, Glenn C & Berger, Mark C & Hoehn, John P, 1988. "New Estimates of Quality of Life in Urban Areas," American Economic Review, American Economic Association, American Economic Association, vol. 78(1), pages 89-107, March.
  2. Card, David & Krueger, Alan B, 1992. "Does School Quality Matter? Returns to Education and the Characteristics of Public Schools in the United States," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 100(1), pages 1-40, February.
  3. Greenwood, Michael J, et al, 1991. "Migration, Regional Equilibrium, and the Estimation of Compensating Differentials," American Economic Review, American Economic Association, American Economic Association, vol. 81(5), pages 1382-90, December.
  4. Koo, Jahyeong & Phillips, Keith R & Sigalla, Fiona D, 2000. "Measuring Regional Cost of Living," Journal of Business & Economic Statistics, American Statistical Association, American Statistical Association, vol. 18(1), pages 127-36, January.
  5. Gyourko, Joseph & Tracy, Joseph, 1991. "The Structure of Local Public Finance and the Quality of Life," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 99(4), pages 774-806, August.
  6. Berger, Mark C. & Blomquist, Glenn C., 1992. "Mobility and destination in migration decisions: The roles of earnings, quality of life, and housing prices," Journal of Housing Economics, Elsevier, Elsevier, vol. 2(1), pages 37-59, March.
  7. Howard J. Wall, 1996. "Voting With Your Feet in the United Kingdom," Archive Discussion Papers, Birkbeck, Department of Economics, Mathematics & Statistics 9617, Birkbeck, Department of Economics, Mathematics & Statistics.
  8. Stuart A. Gabriel & Joe P. Mattey & William L. Wascher, 1995. "The demise of California reconsidered: interstate migration over the economic cycle," Economic Review, Federal Reserve Bank of San Francisco, Federal Reserve Bank of San Francisco, pages 30-48.
  9. Graves, Philip E., 1980. "Migration and climate," MPRA Paper 19916, University Library of Munich, Germany.
  10. repec:fth:prinin:265 is not listed on IDEAS
  11. Roback, Jennifer, 1982. "Wages, Rents, and the Quality of Life," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 90(6), pages 1257-78, December.
  12. Roback, Jennifer, 1988. "Wages, Rents, and Amenities: Differences among Workers and Regions," Economic Inquiry, Western Economic Association International, Western Economic Association International, vol. 26(1), pages 23-41, January.
  13. Joseph Gyourko, 2009. "Housing Supply," Annual Review of Economics, Annual Reviews, Annual Reviews, vol. 1(1), pages 295-318, 05.
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  1. On a Scale of One to Four, How Happy Are You?
    by (author unknown) in The Numbers Guy on 2009-12-23 01:47:07
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