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

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Author Info

  • 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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Related research

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

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References

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  1. Jahyeong Koo & Keith Phillips & Fiona Sigalla, 1997. "Measuring regional cost of living," Working Papers 97-13, Federal Reserve Bank of Dallas.
  2. Gyourko, Joseph & Tracy, Joseph, 1991. "The Structure of Local Public Finance and the Quality of Life," Journal of Political Economy, University of Chicago Press, vol. 99(4), pages 774-806, August.
  3. Greenwood, Michael J, et al, 1991. "Migration, Regional Equilibrium, and the Estimation of Compensating Differentials," American Economic Review, American Economic Association, vol. 81(5), pages 1382-90, December.
  4. Roback, Jennifer, 1982. "Wages, Rents, and the Quality of Life," Journal of Political Economy, University of Chicago Press, vol. 90(6), pages 1257-78, December.
  5. Roback, Jennifer, 1988. "Wages, Rents, and Amenities: Differences among Workers and Regions," Economic Inquiry, Western Economic Association International, vol. 26(1), pages 23-41, January.
  6. 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, pages 30-48.
  7. David Card & Alan Krueger, 1990. "Does School Quality Matter? Returns to Education and the Characteristics of Public Schools in the United States," Working Papers 645, Princeton University, Department of Economics, Industrial Relations Section..
  8. Graves, Philip E., 1980. "Migration and climate," MPRA Paper 19916, University Library of Munich, Germany.
  9. Howard J. Wall, 1996. "Voting With Your Feet in the United Kingdom," Archive Discussion Papers 9617, Birkbeck, Department of Economics, Mathematics & Statistics.
  10. 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, vol. 78(1), pages 89-107, March.
  11. repec:fth:prinin:265 is not listed on IDEAS
  12. 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, vol. 2(1), pages 37-59, March.
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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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Cited by:
  1. Carlsen, Fredrik & Langset, Bjørg & Rattsø, Jørn & Stambøl, Lasse, 2009. "Using survey data to study capitalization of local public services," Regional Science and Urban Economics, Elsevier, vol. 39(6), pages 688-695, November.
  2. Esfandiar Zebardast, 2009. "The Housing Domain of Quality of Life and Life Satisfaction in the Spontaneous Settlements on the Tehran Metropolitan Fringe," Social Indicators Research, Springer, vol. 90(2), pages 307-324, January.
  3. Winters, John V., 2009. "Wages and prices: Are workers fully compensated for cost of living differences?," Regional Science and Urban Economics, Elsevier, vol. 39(5), pages 632-643, September.
  4. Oswald, Andrew J. & Wu, Stephen, 2009. "Well-being across America," IZA Discussion Papers 4600, Institute for the Study of Labor (IZA).
  5. Wang, Songtao & Yang, Zan & Liu, Hongyu, 2011. "Impact of urban economic openness on real estate prices: Evidence from thirty-five cities in China," China Economic Review, Elsevier, vol. 22(1), pages 42-54, March.
  6. John Krainer, 1999. "Real estate liquidity," Economic Review, Federal Reserve Bank of San Francisco, pages 14-26.
  7. Berger, Mark C. & Blomquist, Glenn C. & Sabirianova Peter, Klara, 2008. "Compensating differentials in emerging labor and housing markets: Estimates of quality of life in Russian cities," Journal of Urban Economics, Elsevier, vol. 63(1), pages 25-55, January.
  8. Leven, Charles, 1999. "Methodological Issues in Adjusting Earnings for Quality of Life Differences among Locations," ERSA conference papers ersa99pa096, European Regional Science Association.
  9. David Albouy, 2008. "Are Big Cities Bad Places to Live? Estimating Quality of Life across Metropolitan Areas," NBER Working Papers 14472, National Bureau of Economic Research, Inc.
  10. Stuart A. Gabriel & Joe P. Mattey & William L. Wascher, 1999. "House price differentials and dynamics: evidence from the Los Angeles and San Francisco metropolitan areas," Economic Review, Federal Reserve Bank of San Francisco, pages 3-22.
  11. Partridge, Mark D. & Rickman, Dan S. & Ali, Kamar & Olfert, M. Rose, 2009. "Agglomeration spillovers and wage and housing cost gradients across the urban hierarchy," Journal of International Economics, Elsevier, vol. 78(1), pages 126-140, June.
  12. Partridge, Mark D. & Rickman, Dan S. & Ali, Kamar & Olfert, M. Rose, 2010. "Recent spatial growth dynamics in wages and housing costs: Proximity to urban production externalities and consumer amenities," Regional Science and Urban Economics, Elsevier, vol. 40(6), pages 440-452, November.
  13. Partridge, Mark D. & Rickman, Dan S., 2012. "Integrating regional economic development analysis and land use economics," MPRA Paper 38291, University Library of Munich, Germany.
  14. Winters, John V., 2012. "Differences in Quality of Life Estimates Using Rents and Home Values," IZA Discussion Papers 6703, Institute for the Study of Labor (IZA).
  15. Stuart A. Gabriel & Joe P. Mattey, 1996. "Leaving Los Angeles: migration, economic opportunity and the quality-of-life," Working Papers in Applied Economic Theory 96-10, Federal Reserve Bank of San Francisco.
  16. Jerzy Michalek & Nana Zarnekow, 2012. "Application of the Rural Development Index to Analysis of Rural Regions in Poland and Slovakia," Social Indicators Research, Springer, vol. 105(1), pages 1-37, January.
  17. Marshall, Elizabeth P. & Shortle, James S., 2005. "Using DEA and VEA to Evaluate Quality of Life in the Mid-Atlantic States," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 34(2), October.
  18. Shelby Gerking, 1998. "Spatial economic aspects of the environment and environmental policy: New directions for research," ERSA conference papers ersa98p384, European Regional Science Association.
  19. Cragg, Michael I. & Kahn, Matthew E., 1999. "Climate consumption and climate pricing from 1940 to 1990," Regional Science and Urban Economics, Elsevier, vol. 29(4), pages 519-539, July.
  20. Richard Deitz & Jaison R. Abel, 2008. "Have amenities become relatively more important than firm productivity advantages in metropolitan areas?," Staff Reports 344, Federal Reserve Bank of New York.

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