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Housing Prices and Inter-urban Migration

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  • Cecile Detang-Dessendre
  • Gary Hunt

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  • Virginie Piguet
  • Andrew Plantinga
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    Abstract

    Understanding the causes and consequences of human migration has long been of interest to urban and regional economists. Empirical studies build on the theoretical results of Roback (1982) and Mueser and Graves (1995) by estimating the effects of wages, housing prices, and amenities on inter-area migration. Findings with respect to amenities are clear (e.g., Rappaport 2007), and household-level studies consistently find that relative wages or incomes increase the probability that a household will select a given location (e.g., Berger and Blomquist 1992). In contrast, the results for housing prices are inconclusive. Studies that include area-level measures (e.g., median housing price for a metropolitan area) find a mix of negative, positive, and insignificant effects on inter-area migration decisions (e.g., Hunt and Mueller 2004). Many migration studies exclude housing price measures. This paper investigates the role of housing prices in influencing inter-urban household migration decisions. An important contribution of the study is the development of a new method for representing housing prices in migration analyses. Following the approach commonly used to model wages in studies of household migration, we identify the form of the utility function for which individual-specific housing prices can be predicted for unselected areas as a function of individual characteristics. Our theoretical results guide the development of an empirical measure of housing costs that accounts for the decision to own or rent and the cost of holding housing capital. We test our housing cost measure using the 2000 PUMS to identify point-to-point migration decisions for a large sample of college-educated males residing in 291 U.S. metropolitan areas. We estimate conditional logit models of metropolitan area choice, controlling for wages, a large range of amenities, and expected housing costs. Our key finding is that our proposed housing cost measure yields the expected results (higher housing prices reduce the probability that an area is selected), which is robust to alternative specifications and samples. We re-estimate our model using three alternative metropolitan area measures of housing costs: median house price, average apartment rent, and average urban land rent. We find that these measures consistently yield counterintuitive results.

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    Bibliographic Info

    Paper provided by European Regional Science Association in its series ERSA conference papers with number ersa11p938.

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    Date of creation: Sep 2011
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    Handle: RePEc:wiw:wiwrsa:ersa11p938

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    1. Cécile Détang-Dessendre & Florence Goffette-Nagot & Virginie Piguet, 2008. "Life Cycle And Migration To Urban And Rural Areas: Estimation Of A Mixed Logit Model On French Data," Journal of Regional Science, Wiley Blackwell, Wiley Blackwell, vol. 48(4), pages 789-824.
    2. John Kennan & James R. Walker, 2011. "The Effect of Expected Income on Individual Migration Decisions," Econometrica, Econometric Society, Econometric Society, vol. 79(1), pages 211-251, 01.
    3. Jepsen, Christopher & Jepsen, Lisa K., 2009. "Does home ownership vary by sexual orientation?," Regional Science and Urban Economics, Elsevier, Elsevier, vol. 39(3), pages 307-315, May.
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    6. Holger Sieg & V. Kerry Smith & H. Spencer Banzhaf & Randy Walsh, . "Estimating the General Equilibrium Benefits of Large Changes in Spatially Delineated Public Goods," GSIA Working Papers, Carnegie Mellon University, Tepper School of Business 2003-07, Carnegie Mellon University, Tepper School of Business.
    7. Chan, Sewin, 2001. "Spatial Lock-in: Do Falling House Prices Constrain Residential Mobility?," Journal of Urban Economics, Elsevier, vol. 49(3), pages 567-586, May.
    8. Paul Cheshire & Stefano Magrini, 2005. "Population Growth in European Cities: weather matters – but only nationally," Urban/Regional, EconWPA 0506009, EconWPA.
    9. 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.
    10. Ferreira, Fernando & Gyourko, Joseph & Tracy, Joseph, 2010. "Housing busts and household mobility," Journal of Urban Economics, Elsevier, vol. 68(1), pages 34-45, July.
    11. Ihlanfeldt, Keith R. & Martinez-Vazquez, Jorge, 1986. "Alternative value estimates of owner-occupied housing: Evidence on sample selection bias and systematic errors," Journal of Urban Economics, Elsevier, vol. 20(3), pages 356-369, November.
    12. Painter, Gary & Gabriel, Stuart & Myers, Dowell, 2001. "Race, Immigrant Status, and Housing Tenure Choice," Journal of Urban Economics, Elsevier, vol. 49(1), pages 150-167, January.
    13. Lewis, David A. & Hunt, Gary L. & Plantinga, Andrew J., 2001. "Public Conservation Land And Employment Growth In The Northern Forest Region," 2001 Annual meeting, August 5-8, Chicago, IL, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association) 20748, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    14. Jordan Rappaport, 2004. "Moving to Nice Weather," Econometric Society 2004 North American Summer Meetings, Econometric Society 188, Econometric Society.
    15. Gary L. Hunt, 2000. "Alternative Nested Logit Model Structures and the Special Case of Partial Degeneracy," Journal of Regional Science, Wiley Blackwell, Wiley Blackwell, vol. 40(1), pages 89-113.
    16. Michael S. Dahl & Olav Sorenson, 2010. "The Migration of Technical Workers," NBER Chapters, National Bureau of Economic Research, Inc, in: Cities and Entrepreneurship National Bureau of Economic Research, Inc.
    17. Eichman, Henry & Hunt, Gary L. & Kerkvliet, Joe & Plantinga, Andrew J., 2010. "Local Employment Growth, Migration, and Public Land Policy: Evidence from the Northwest Forest Plan," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, Western Agricultural Economics Association, vol. 35(2), August.
    18. Engelhardt, Gary V., 2003. "Nominal loss aversion, housing equity constraints, and household mobility: evidence from the United States," Journal of Urban Economics, Elsevier, vol. 53(1), pages 171-195, January.
    19. Chen, Yong & Rosenthal, Stuart S., 2008. "Local amenities and life-cycle migration: Do people move for jobs or fun?," Journal of Urban Economics, Elsevier, vol. 64(3), pages 519-537, November.
    20. 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.
    21. McGranahan, David A., 1999. "Natural Amenities Drive Rural Population Change," Agricultural Economics Reports, United States Department of Agriculture, Economic Research Service 33955, United States Department of Agriculture, Economic Research Service.
    22. Hendershott, Patric H. & Ong, Rachel & Wood, Gavin A. & Flatau, Paul, 2009. "Marital history and home ownership: Evidence from Australia," Journal of Housing Economics, Elsevier, Elsevier, vol. 18(1), pages 13-24, March.
    23. Gary L. Hunt & Richard E. Mueller, 2004. "North American Migration: Returns to Skill, Border Effects, and Mobility Costs," The Review of Economics and Statistics, MIT Press, vol. 86(4), pages 988-1007, November.
    24. Paul D. Gottlieb & George Joseph, 2006. "College-To-Work Migration Of Technology Graduates And Holders Of Doctorates Within The United States," Journal of Regional Science, Wiley Blackwell, Wiley Blackwell, vol. 46(4), pages 627-659.
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