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Maximum Score Estimates of the Determinants of Residential Mobility: Implications for the Value of Residential Attachment and Neighborhood Amenities

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This paper examines the determinants of the decision of low-income renters to move out of their current dwelling. Maximum score estimation is shown t be superior to ordinary discrete choice estimation techniques (probit, logit) for this problem, ad for similar discrete choices that require revering a previously optimal decision. The estimation reveals psychological costs of moving for typical low income renters of at least 8 percent of their income; these costs are even higher for older, longer tenure, or minority households. Policies that displace low income renters will have large social costs. In addition, the estimation results are used to calculate implicit household willingness to pay (WTP) for neighborhood amenities. This WTP based on mobility behavior is much greater than WTP estimates derived using hedonic methods, and is argued to be more accurate. This paper uses a semiparametric empirical technique to estimate the determinants of the decision of low-income renters to move out of their dwelling. These estimates show that low-income residents highly value remaining in their dwelling. In addition, these estimates are used to illustrate an alternative method to measure willingness to pay for neighborhood amenities. Moving decisions are usually examined with standard discrete choice models such as probit or logit (e.g., Venti and Wise (1984), or Weinberg, Friedman, and Mayo (1981). But the moving decision presents econometric difficulties for standard discrete choice models. As will be explained in section 1, because the household decision about moving is conditional on having previously preferred the original location, the disturbance term in mobility models is unlikely to follow the simple distributional forms required for probit or logit estimation. Maximum score estimation is an alternative estimation technique for discrete choice models that is robust to unusual distributions of the disturbance term. Although the theoretical properties of maximum score e

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Paper provided by W.E. Upjohn Institute for Employment Research in its series Upjohn Working Papers and Journal Articles with number tjb1992jue.

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Handle: RePEc:upj:weupjo:tjb1992jue

Note: Appears in Journal of Urban Economics 32(2): 233-256
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Keywords: local economic development; residential mobility; amenities;

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References

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  1. Manski, Charles F. & Thompson, T. Scott, 1986. "Operational characteristics of maximum score estimation," Journal of Econometrics, Elsevier, vol. 32(1), pages 85-108, June.
  2. Bolton, R., 1989. "An Economic Interpretation Of A Sense Of Place," Department of Economics Working Papers 130, Department of Economics, Williams College.
  3. Venti, Steven F. & Wise, David A., 1984. "Moving and housing expenditure: Transaction costs and disequilibrium," Journal of Public Economics, Elsevier, vol. 23(1-2), pages 207-243.
  4. Dynarski, Mark, 1985. "Housing demand and disequilibrium," Journal of Urban Economics, Elsevier, vol. 17(1), pages 42-57, January.
  5. Dunn, L. F., 1979. "Measuring the value of community," Journal of Urban Economics, Elsevier, vol. 6(3), pages 371-382, July.
  6. Bartik, Timothy J. & Smith, V. Kerry, 1987. "Urban amenities and public policy," Handbook of Regional and Urban Economics, in: E. S. Mills (ed.), Handbook of Regional and Urban Economics, edition 1, volume 2, chapter 31, pages 1207-1254 Elsevier.
  7. Manski, Charles F., 1975. "Maximum score estimation of the stochastic utility model of choice," Journal of Econometrics, Elsevier, vol. 3(3), pages 205-228, August.
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Citations

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Cited by:
  1. Gregory Kordas, 2006. "Smoothed binary regression quantiles," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 21(3), pages 387-407.
  2. Jos Van Ommeren & Mihails Hazans, 2008. "Workers' Valuation of the Remaining Employment Contract Duration," Economica, London School of Economics and Political Science, vol. 75(297), pages 116-139, 02.
  3. Van Ommeren, Jos & Fosgerau, Mogens, 2009. "Workers' marginal costs of commuting," Journal of Urban Economics, Elsevier, vol. 65(1), pages 38-47, January.
  4. Ji, Yonggang & Lin, Nan & Zhang, Baoxue, 2012. "Model selection in binary and tobit quantile regression using the Gibbs sampler," Computational Statistics & Data Analysis, Elsevier, vol. 56(4), pages 827-839.
  5. Teemu Lyytikäinen, 2008. "Studies on the Effects of Property Taxation, Rent Control and Housing Allowances," Research Reports 140, Government Institute for Economic Research Finland (VATT).
  6. Quigley, John M., 2002. "Transactions Costs and Housing Markets," Berkeley Program on Housing and Urban Policy, Working Paper Series qt6pz8p6zt, Berkeley Program on Housing and Urban Policy.
  7. Wenli Li & Haiyong Liu & Rui Yao, 2009. "Housing over time and over the life cycle: a structural estimation," Working Papers 09-7, Federal Reserve Bank of Philadelphia.
  8. Ross, Stephen L., 1998. "Racial Differences in Residential and Job Mobility: Evidence Concerning the Spatial Mismatch Hypothesis," Journal of Urban Economics, Elsevier, vol. 43(1), pages 112-135, January.
  9. Aaronson, Daniel, 1999. "The Effect of School Finance Reform on Population Heterogeneity," National Tax Journal, National Tax Association, vol. 52(n. 1), pages 5-29, March.
  10. Florios, Kostas & Skouras, Spyros, 2008. "Exact computation of max weighted score estimators," Journal of Econometrics, Elsevier, vol. 146(1), pages 86-91, September.
  11. Kan, Kamhon, 2007. "Residential mobility and social capital," Journal of Urban Economics, Elsevier, vol. 61(3), pages 436-457, May.
  12. Van Ommeren, Jos & Koopman, Marnix, 2011. "Public housing and the value of apartment quality to households," Regional Science and Urban Economics, Elsevier, vol. 41(3), pages 207-213, May.
  13. Jos van Ommeren & Gerard J. van den Berg & Cees Gorter, 2000. "Estimating the Marginal Willingness to Pay for Commuting," Journal of Regional Science, Wiley Blackwell, vol. 40(3), pages 541-563.
  14. Van Ommeren, Jos & Graaf-de Zijl, Marloes, 2013. "Estimating household demand for housing attributes in rent-controlled markets," Journal of Housing Economics, Elsevier, vol. 22(1), pages 11-19.
  15. van Ommeren, Jos & Rietveld, Piet & Nijkamp, Peter, 1999. "Job Moving, Residential Moving, and Commuting: A Search Perspective," Journal of Urban Economics, Elsevier, vol. 46(2), pages 230-253, September.
  16. Cragg, Michael & Kahn, Matthew, 1997. "New Estimates of Climate Demand: Evidence from Location Choice," Journal of Urban Economics, Elsevier, vol. 42(2), pages 261-284, September.
  17. Jos Van Ommeren & Marnix Koopman, 2010. "Public Housing and the Value of Apartment Quality to Households," Tinbergen Institute Discussion Papers 10-085/3, Tinbergen Institute.

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