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The Effect of Housing Costs on Household Transportation

Author

Listed:
  • Khammo, Faye

    (Monash University)

Abstract

We use individual-level panel data from Australia and a novel fixed-effect instrumental variable approach to estimate the causal effect of housing cost on five measures of household transportation; work commute time, relocation, and the respective expenditure share on motor vehicle fuel, public transport and taxi, and total transportation. The instrumental variable exploits arguably exogenous variation in housing costs induced by foreign investments that flow differentially into regions according to the past geographical distribution of immigrants. We find that rises in housing costs, measured by the composite opportunity costs faced by representative renters and owners living in an area, increase an individual’s work commute time and the probability of relocation, and lead to a shift in the individual’s expenditure away from fuel towards public transportation.

Suggested Citation

  • Khammo, Faye, 2023. "The Effect of Housing Costs on Household Transportation," Warwick-Monash Economics Student Papers 44, Warwick Monash Economics Student Papers.
    • Handle: RePEc:wrk:wrkesp:44
    as

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    File URL: https://warwick.ac.uk/fac/soc/economics/research/wmesp/manage/44_-_faye_khammo.pdf
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    References listed on IDEAS

    as
    1. Yogi Vidyattama & Robert Tanton & Binod Nepal, 2013. "The Effect of Transport Costs on Housing-related Financial Stress in Australia," Urban Studies, Urban Studies Journal Limited, vol. 50(9), pages 1779-1795, July.
    2. Jian Liang & Kang Mo Koo & Chyi Lin Lee, 2021. "Transportation infrastructure improvement and real estate value: impact of level crossing removal project on housing prices," Transportation, Springer, vol. 48(6), pages 2969-3011, December.
    3. Jin, Eunae & Kim, Danya & Jin, Jangik, 2022. "Commuting time and perceived stress: Evidence from the intra- and inter-city commuting of young workers in Korea," Journal of Transport Geography, Elsevier, vol. 104(C).
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Housing cost ; Transportation cost ; Commute time ; Household relocation ; Transportation expenditure ; Transportation mode JEL classifications: R20 ; R21 ; R40 ; F21;
    All these keywords.

    JEL classification:

    • R20 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - General
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand
    • R40 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - General
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements

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