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Measuring Quality of Life Under Spatial Frictions

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  • Gabriel M. Ahlfeldt
  • Fabian Bald
  • Duncan H.W. Roth
  • Tobias Seidel
  • Gabriel Ahlfeldt
  • Duncan Roth

Abstract

Using a quantitative spatial model as a data-generating process, we explore how spatial frictions affect the measurement of quality of life. We find that under a canonical parameterization, mobility frictions—generated by idiosyncratic tastes and local ties—dominate trade frictions—generated by trade costs and non-tradable services—as a source of measurement error in the Rosen-Roback framework. This non-classical measurement error leads to a downward bias in es-timates of the urban quality-of-life premium. Our application to Germany reveals that accounting for spatial frictions results in larger quality-of-life differences, different quality-of-life rankings, and an urban quality-of-life premium that exceeds the urban wage premium.

Suggested Citation

  • Gabriel M. Ahlfeldt & Fabian Bald & Duncan H.W. Roth & Tobias Seidel & Gabriel Ahlfeldt & Duncan Roth, 2024. "Measuring Quality of Life Under Spatial Frictions," CESifo Working Paper Series 11560, CESifo.
    • Handle: RePEc:ces:ceswps:_11560
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    References listed on IDEAS

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    1. Pierre-Philippe Combes & Gilles Duranton & Laurent Gobillon, 2019. "The Costs of Agglomeration: House and Land Prices in French Cities," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 86(4), pages 1556-1589.
    2. John M. Abowd & Francis Kramarz & David N. Margolis, 1999. "High Wage Workers and High Wage Firms," Econometrica, Econometric Society, vol. 67(2), pages 251-334, March.
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    Cited by:

    1. Seidel Tobias, 2024. "Optimale regionale Transfers," Wirtschaftsdienst, Sciendo, vol. 104(11), pages 763-767.
    2. Ssembajwe, Ronald & Mulinde, Catherine & Ddumba, Saul D. & Kagezi, Godfrey H. & Opio, Ronald & Kobusinge, Judith & Mugagga, Frank & Bamutaze, Yazidi & Gidudu, Anthony & Arinaitwe, Geoffrey & Voda, Mih, 2025. "Dynamics and associations of selected agrometeorological variables in Robusta growing regions of Uganda," Agricultural Water Management, Elsevier, vol. 307(C).

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    Keywords

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    JEL classification:

    • J20 - Labor and Demographic Economics - - Demand and Supply of Labor - - - General
    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
    • R20 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - General
    • R30 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - General
    • R50 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - General

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