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Driving to opportunity: Local rents, wages, commuting, and sub-metropolitan quality of life

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  • Albouy, David
  • Lue, Bert

Abstract

We examine variation in local rents, wage levels, commuting costs, household characteristics, and amenities within metropolitan areas, for 2071 areas covering the United States, by density and central-city status. We demonstrate the sensibility of estimating wage levels by workplace, not residence, and recover decentralized rent gradients that fall with commuting costs. We construct and map a willingness-to-pay index, which indicates the quality of life typical households receive from local amenities when households are similar, mobile, and informed. This index varies considerably within metros, and is typically high in areas that are dense, suburban, sunny, mild, safe, entertaining, and have elevated school-funding.

Suggested Citation

  • Albouy, David & Lue, Bert, 2015. "Driving to opportunity: Local rents, wages, commuting, and sub-metropolitan quality of life," Journal of Urban Economics, Elsevier, vol. 89(C), pages 74-92.
  • Handle: RePEc:eee:juecon:v:89:y:2015:i:c:p:74-92
    DOI: 10.1016/j.jue.2015.03.003
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    1. Gabriel M. Ahlfeldt & Elisabetta Pietrostefani, 2017. "The Economic Effects of Density: A Synthesis," SERC Discussion Papers 0210, Spatial Economics Research Centre, LSE.
    2. David Albouy & Walter Graf & Ryan Kellogg & Hendrik Wolff, 2016. "Climate Amenities, Climate Change, and American Quality of Life," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 3(1), pages 205-246.
    3. Gabriel M. Ahfeldt & Elisabetta Pietrostefani, 2017. "The Compact City in Empirical Research: A Quantitative Literature Review," SERC Discussion Papers 0215, Spatial Economics Research Centre, LSE.
    4. David Albouy & Mike Zabek, 2016. "Housing Inequality," NBER Working Papers 21916, National Bureau of Economic Research, Inc.
    5. repec:eee:juecon:v:105:y:2018:i:c:p:54-69 is not listed on IDEAS
    6. Lena Edlund & Cecilia Machado & Maria Sviatschi, 2016. "Bright Minds, Big Rent: Gentrification and the Rising Returns to Skill," Working Papers 16-36, Center for Economic Studies, U.S. Census Bureau.
    7. Lena Edlund & Cecilia Machado & Maria Micaela Sviatschi, 2015. "Bright Minds, Big Rent: Gentrification and the Rising Returns to Skill," NBER Working Papers 21729, National Bureau of Economic Research, Inc.
    8. Oikarinen, Elias & Bourassa, Steven C. & Hoesli, Martin & Engblom, Janne, 2018. "U.S. metropolitan house price dynamics," Journal of Urban Economics, Elsevier, vol. 105(C), pages 54-69.
    9. Ahfeldt, Gabriel M. & Pietrostefani, Elisabetta, 2017. "The compact city in empirical research: A quantitative literature review," LSE Research Online Documents on Economics 83638, London School of Economics and Political Science, LSE Library.
    10. repec:eee:juecon:v:99:y:2017:i:c:p:120-135 is not listed on IDEAS
    11. Paul Frijters & Benno Torgler & Grace Gao & Daniel Melser, 2016. "Revealed Preference Measures of Quality of Life in Australia's Urban and Regional Areas," The Economic Record, The Economic Society of Australia, vol. 92, pages 15-29, June.
    12. repec:exl:25engi:v:27:y:2016:i:5:p:557-567 is not listed on IDEAS
    13. Brad R. Humphreys & Hyunwoong Pyun, 2017. "Professional Sporting Events and Traffic: Evidence from US Cities," Working Papers 17-05, Department of Economics, West Virginia University.
    14. Victor Couture & Jessie Handbury, 2017. "Urban Revival in America, 2000 to 2010," NBER Working Papers 24084, National Bureau of Economic Research, Inc.

    More about this item

    Keywords

    Quality of life; Commuting costs; Rent gradients; Wage gradients; Residential sorting; Amenities;

    JEL classification:

    • H4 - Public Economics - - Publicly Provided Goods
    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
    • Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics
    • R1 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics

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