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The Determinants of Joint Residential and Job Location Choices: A Mixed Logit Approach

  • Alexander Ebertz

This paper empirically investigates the household's decision to reside and work either inthe central metropolitan area, or in the surrounding nonmetropolitan area, or to commutebetween the two regions. As economic theory suggests the location decisionamounts to trading off wages, housing costs, and commuting time. A mixed logit modelis employed to quantify the interaction effects of these economic factors in the jointresidential and job location choice. The empirical approach does not rely on the restrictiveIIA assumption and allows for arbitrary correlation patterns between coefficients.Using data from a recent survey of more than half a million German households, theelasticities of individual location choice with respect to wages, housing costs, and commutingtime are estimated. The results show that individual valuations of these factorsare of the expected signs but vary substantially in the population. Shifts in consumersurplus and in the spatial distribution of households that are associated with changes inthe determinants of location choice are calculated based on the empirical estimates.

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File URL: http://www.cesifo-group.de/portal/page/portal/DocBase_Content/WP/WP-Ifo_Working_Papers/wp-ifo-2005-2010/IfoWorkingPaper-82.pdf
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Paper provided by Ifo Institute for Economic Research at the University of Munich in its series Ifo Working Paper Series with number Ifo Working Paper Nr. 82.

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Date of creation: 2009
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Handle: RePEc:ces:ifowps:_82
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  1. Paul Krugman, 1990. "Increasing Returns and Economic Geography," NBER Working Papers 3275, National Bureau of Economic Research, Inc.
  2. Borck, Rainald & Pflüger, Michael P. & Wrede, Matthias, 2007. "A Simple Theory of Industry Location and Residence Choice," IZA Discussion Papers 2862, Institute for the Study of Labor (IZA).
  3. Brownstone, David & Train, Kenneth, 1999. "Forecasting new product penetration with flexible substitution patterns," University of California Transportation Center, Working Papers qt1j6814b3, University of California Transportation Center.
  4. Nechyba, Thomas J. & Strauss, Robert P., 1998. "Community choice and local public services: A discrete choice approach," Regional Science and Urban Economics, Elsevier, vol. 28(1), pages 51-73, January.
  5. Arne Risa Hole, 2007. "Fitting mixed logit models by using maximum simulated likelihood," Stata Journal, StataCorp LP, vol. 7(3), pages 388-401, September.
  6. Yasusada, MURATA & Jacques-François, THISSE, 2004. "A simple model of economic geography à la Helpman-Tabuchi," Discussion Papers (ECON - Département des Sciences Economiques) 2005017, Université catholique de Louvain, Département des Sciences Economiques, revised 15 Feb 2005.
  7. Thiess Büttner & Alexander Ebertz, 2009. "Spatial Implications of Minimum Wages," Ifo Working Paper Series Ifo Working Paper No. 66, Ifo Institute for Economic Research at the University of Munich.
  8. Tabuchi, Takatoshi, 1998. "Urban Agglomeration and Dispersion: A Synthesis of Alonso and Krugman," Journal of Urban Economics, Elsevier, vol. 44(3), pages 333-351, November.
  9. Quigley, John M., 2006. "Urban Economics," Berkeley Program on Housing and Urban Policy, Working Paper Series qt0jr0p2tk, Berkeley Program on Housing and Urban Policy.
  10. Patrick Bayer & Fernando Ferreira & Robert McMillan, 2007. "A Unified Framework for Measuring Preferences for Schools and Neighborhoods," Working Papers 07-27, Center for Economic Studies, U.S. Census Bureau.
  11. Schmidheiny, Kurt, 2003. "Income Segregation and Local Progressive Taxation: Empirical Evidence from Switzerland," HWWA Discussion Papers 248, Hamburg Institute of International Economics (HWWA).
  12. Takatoshi Tabuchi & Jacques-Francois Thisse, 2003. "Regional Specialization, Urban Hierarchy, and Commuting Costs," CIRJE F-Series CIRJE-F-223, CIRJE, Faculty of Economics, University of Tokyo.
  13. Krugman, Paul & Elizondo, Raul Livas, 1996. "Trade policy and the Third World metropolis," Journal of Development Economics, Elsevier, vol. 49(1), pages 137-150, April.
  14. Ben-Akiva, M. & Bolduc, D. & Bradley, M., 1993. "Estimation of Travel Choice Models with Randomly Distributed Values of Time," Papers 9303, Laval - Recherche en Energie.
  15. Stutzer, Alois & Frey, Bruno S., 2004. "Stress That Doesn't Pay: The Commuting Paradox," IZA Discussion Papers 1278, Institute for the Study of Labor (IZA).
  16. Bhat, Chandra R., 1998. "Accommodating variations in responsiveness to level-of-service measures in travel mode choice modeling," Transportation Research Part A: Policy and Practice, Elsevier, vol. 32(7), pages 495-507, September.
  17. So, Kim Sui & Orazem, Peter & Otto, Daniel, 2009. "The Effect of Housing Prices, Wages, and Commuting Time on Joint Residential and Job Location Choices," Staff General Research Papers 4050, Iowa State University, Department of Economics.
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