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Wages, Rents, Unemployment, and the Quality of Life

  • Matthias Wrede

Combining a spatial equilibrium model with a matching unemployment model, this paper analyzes the regional quality of life when wages, rents, and unemployment risk compensate for local amenities and disamenities. In particular, the paper shows for quasi-linear utility that the effects of any amenity on wages and unemployment rates are of opposite sign. Additionally, the wage rate and the labor market tightness increase and the unemployment ratio decreases in reaction to an increase in the level of an amenity if the amenity is marginally more beneficial to producers than to consumers per unit of land. Based on the model, quality of life of average mobile workers in West German counties is estimated.

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Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 3803.

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Date of creation: 2012
Date of revision:
Handle: RePEc:ces:ceswps:_3803
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  1. Stuart Gabriel & Stuart S. Rosenthal, 2003. "Quality of the Business Environment Versus Quality of Life: Do Firms and Households Like the Same Cities?," Working Paper 8615, USC Lusk Center for Real Estate.
  2. Winters, John V., 2012. "Differences in Quality of Life Estimates Using Rents and Home Values," IZA Discussion Papers 6703, Institute for the Study of Labor (IZA).
  3. Greenwood, Michael J, et al, 1991. "Migration, Regional Equilibrium, and the Estimation of Compensating Differentials," American Economic Review, American Economic Association, vol. 81(5), pages 1382-90, December.
  4. Suedekum, Jens, 2004. "Increasing Returns and Spatial Unemployment Disparities," HWWA Discussion Papers 256, Hamburg Institute of International Economics (HWWA).
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  7. Zenou,Yves, 2009. "Urban Labor Economics," Cambridge Books, Cambridge University Press, number 9780521875387.
  8. Blanchflower, David G & Oswald, Andrew J, 1990. " The Wage Curve," Scandinavian Journal of Economics, Wiley Blackwell, vol. 92(2), pages 215-35.
    • David G. Blanchflower & Andrew J. Oswald, 1995. "The Wage Curve," MIT Press Books, The MIT Press, edition 1, volume 1, number 026202375x, June.
  9. Kentaro Nakajima & Takatoshi Tabuchi, 2011. "Estimating Interregional Utility Differentials," Journal of Regional Science, Wiley Blackwell, vol. 51(1), pages 31-46, 02.
  10. Roback, Jennifer, 1982. "Wages, Rents, and the Quality of Life," Journal of Political Economy, University of Chicago Press, vol. 90(6), pages 1257-78, December.
  11. Christopher A. Pissarides, 2000. "Equilibrium Unemployment Theory, 2nd Edition," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262161877, June.
  12. Thiess Büttner & Alexander Ebertz, 2007. "Quality of Life in the Regions - Results for German Counties," Ifo Working Paper Series Ifo Working Paper No. 49, Ifo Institute for Economic Research at the University of Munich.
  13. David Y. Albouy, 2008. "The Unequal Geographic Burden of Federal Taxation," NBER Working Papers 13995, National Bureau of Economic Research, Inc.
  14. Bellmann, Lutz & Gerner, Hans-Dieter & Upward, Richard, 2011. "Job and Worker Turnover in German Establishments," IZA Discussion Papers 6081, Institute for the Study of Labor (IZA).
  15. Kline, Patrick & Moretti, Enrico, 2013. "Place Based Policies with Unemployment," CEPR Discussion Papers 9330, C.E.P.R. Discussion Papers.
  16. Patrick Bayer & Nathaniel Keohane & Christopher Timmins, 2006. "Migration and Hedonic Valuation: The Case of Air Quality," NBER Working Papers 12106, National Bureau of Economic Research, Inc.
  17. Chen, Yong & Rosenthal, Stuart S., 2008. "Local amenities and life-cycle migration: Do people move for jobs or fun?," Journal of Urban Economics, Elsevier, vol. 64(3), pages 519-537, November.
  18. Deller, Steven C., 2009. "Wages, Rent, Unemployment and Amenities," Journal of Regional Analysis and Policy, Mid-Continent Regional Science Association, vol. 39(2).
  19. Peter Nijkamp & Jacques Poot, 2002. "The Last Word on the Wage Curve?," Tinbergen Institute Discussion Papers 02-029/3, Tinbergen Institute, revised 13 Mar 2003.
  20. Gyourko, Joseph & Tracy, Joseph, 1991. "The Structure of Local Public Finance and the Quality of Life," Journal of Political Economy, University of Chicago Press, vol. 99(4), pages 774-806, August.
  21. Lee, Chul-In, 2008. "Migration and the wage and unemployment gaps between urban and non-urban sectors: A dynamic general equilibrium reinterpretation of the Harris-Todaro equilibrium," Labour Economics, Elsevier, vol. 15(6), pages 1416-1434, December.
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