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Simulating Wages and House Prices Using the NEG


  • Bernard Fingleton


The paper incorporates house prices within an NEG framework leading to the spatialdistributions of wages, prices and income. The model assumes that all expenditure goes tofirms under a monopolistic competition market structure, that labour efficiency units areappropriate, and that spatial equilibrium exists. The house price model coefficients areestimated outside the NEG model, allowing an econometric analysis of the significance ofrelevant covariates. The paper illustrates the methodology by estimating wages, income andprices for small administrative areas in Great Britain, and uses the model to simulate theeffects of an exogenous employment shock.

Suggested Citation

  • Bernard Fingleton, 2009. "Simulating Wages and House Prices Using the NEG," SERC Discussion Papers 0021, Spatial Economics Research Centre, LSE.
  • Handle: RePEc:cep:sercdp:0021

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    References listed on IDEAS

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    Cited by:

    1. Dusan Paredes, 2012. "Alternative theories for explaining the spatial wage inequality: a multilevel competition among human capital, NEG and amenities," Documentos de Trabajo en Economia y Ciencia Regional 20, Universidad Catolica del Norte, Chile, Department of Economics, revised Apr 2012.
    2. Baltagi, Badi H. & Fingleton, Bernard & Pirotte, Alain, 2014. "Spatial lag models with nested random effects: An instrumental variable procedure with an application to English house prices," Journal of Urban Economics, Elsevier, vol. 80(C), pages 76-86.

    More about this item


    new economic geography; real estate prices; spatial econometrics;

    JEL classification:

    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • C31 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions; Social Interaction Models
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets

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