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Location, Location, Location

Author

Listed:
  • David Card
  • Jesse Rothstein
  • Moises Yi

Abstract

We use linked employer–employee data to study the causal effects of location on earnings in the United States. We estimate a model with employer and employee effects, then aggregate to the commuting zone (CZ) level. Sorting across firms biases traditional "movers" designs. Our model accurately predicts earnings changes for CZ movers after accounting for firm sorting. Worker skills explain half of observed earnings differences across CZs; observable characteristics understate this. Industry composition explains little of average place effects. Costs at least offset CZ earnings premia on average; workers who move to higher-wage CZs have equal or lower real consumption.

Suggested Citation

  • David Card & Jesse Rothstein & Moises Yi, 2025. "Location, Location, Location," American Economic Journal: Applied Economics, American Economic Association, vol. 17(1), pages 297-336, January.
    • Handle: RePEc:aea:aejapp:v:17:y:2025:i:1:p:297-336
    DOI: 10.1257/app.20220427
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    Cited by:

    1. Diogo G. C. Britto & Alexandre Fonseca & Paolo Pinotti & Breno Sampaio & Lucas Warwar, 2022. "Intergenerational Mobility in the Land of Inequality," CESifo Working Paper Series 10004, CESifo.
    2. Orley Ashenfelter & Štěpán Jurajda, 2024. "U.S. Low-Wage Structure: A McWage Comparison," Working Papers 658, Princeton University, Department of Economics, Industrial Relations Section..
    3. David Card & Jesse Rothstein & Moises Yi, 2026. "How Do Neighborhoods and Firms Affect Intergenerational Mobility?," Working Papers 26-18, Center for Economic Studies, U.S. Census Bureau.
    4. Bauluz, Luis & Bukowski, Pawel & Fransham, Mark & Lee, Annie Seong & López Forero, Margarita & Novokmet, Filip & Breau, Sébastien & Lee, Neil & Malgouyres, Clément & Schularick, Moritz & Verdugo, Greg, 2023. "Spatial wage inequality in North America and Western Europe: changes between and within local labour markets 1975-2019," LSE Research Online Documents on Economics 121290, London School of Economics and Political Science, LSE Library.
    5. Gupta, Arpit & Hansman, Christopher & Mabille, Pierre, 2025. "Financial constraints and the racial housing gap," Journal of Financial Economics, Elsevier, vol. 173(C).
    6. Ivan Badinski & Amy Finkelstein & Matthew Gentzkow & Peter Hull, 2023. "Geographic Variation in Healthcare Utilization: The Role of Physicians," NBER Working Papers 31749, National Bureau of Economic Research, Inc.
    7. Kemeny, Tom & Petralia, Sergio & Storper, Michael, 2022. "Disruptive innovation and spatial inequality," LSE Research Online Documents on Economics 115953, London School of Economics and Political Science, LSE Library.
    8. Buchholz, Maximilian & Kemeny, Tom & Randolph, Gregory & Storper, Michael, 2026. "Inequality, not regulation, drives America's housing affordability crisis," SocArXiv 95trz_v1, Center for Open Science.
    9. Paolo Pinotti & Diogo G. C. Britto & Alexandre Fonseca & Breno Sampaio & Lucas Warwar, 2022. "Intergenerational Mobility in the Land of Inequality," CReAM Discussion Paper Series 2322, Centre for Research and Analysis of Migration (CReAM), Department of Economics, University College London.
    10. Braunschweig, Luisa & Dauth, Wolfgang & Roth, Duncan, 2024. "Job Mobility and Assortative Matching," IAB-Discussion Paper 202411, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    11. Joshua D. Gottlieb & Maria Polyakova & Kevin Rinz & Hugh Shiplett & Victoria Udalova, 2023. "Who Values Human Capitalists' Human Capital? The Earnings and Labor Supply of U.S. Physicians," NBER Working Papers 31469, National Bureau of Economic Research, Inc.

    More about this item

    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population
    • R32 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Other Spatial Production and Pricing Analysis

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