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Are Regional Differences in Utility Eliminated over Time?: Evidence from Germany

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  • David Maddison
  • Katrin Rehdanz

Abstract

Hedonic theory assumes that changes in land prices and wage rates eliminate the utility advantages of differing locations. Using happiness data from the German socio-economic panel this paper empirically tests whether regional utility differences exist and if so whether utility levels show any tendency to converge over time. Empirical analysis reveals substantial differences in utility over different regions of Germany. Analysing a panel of data indicates that even if individual utility levels are at any one moment in disequilibrium they are rapidly converging over Germany for all types of individuals.

Suggested Citation

  • David Maddison & Katrin Rehdanz, 2007. "Are Regional Differences in Utility Eliminated over Time?: Evidence from Germany," SOEPpapers on Multidisciplinary Panel Data Research 16, DIW Berlin, The German Socio-Economic Panel (SOEP).
  • Handle: RePEc:diw:diwsop:diw_sp16
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    File URL: http://www.diw.de/documents/publikationen/73/diw_01.c.57332.de/diw_sp0016.pdf
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    References listed on IDEAS

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    1. Bruno S. Frey & Alois Stutzer, 2002. "What Can Economists Learn from Happiness Research?," Journal of Economic Literature, American Economic Association, vol. 40(2), pages 402-435, June.
    2. Roback, Jennifer, 1982. "Wages, Rents, and the Quality of Life," Journal of Political Economy, University of Chicago Press, vol. 90(6), pages 1257-1278, December.
    3. Rosen, Sherwin, 1974. "Hedonic Prices and Implicit Markets: Product Differentiation in Pure Competition," Journal of Political Economy, University of Chicago Press, vol. 82(1), pages 34-55, Jan.-Feb..
    4. Jennifer Hunt, 2000. "Why Do People Still Live in East Germany?," NBER Working Papers 7564, National Bureau of Economic Research, Inc.
    5. Jennifer Hunt, 2004. "Are migrants more skilled than non-migrants? Repeat, return, and same-employer migrants," Canadian Journal of Economics, Canadian Economics Association, vol. 37(4), pages 830-849, November.
    6. Gyourko, Joseph & Tracy, Joseph, 1989. "The Importance of Local Fiscal Conditions in Analyzing Local Labor Markets," Journal of Political Economy, University of Chicago Press, vol. 97(5), pages 1208-1231, October.
    7. Paul Frijters & John P. Haisken-DeNew & Michael A. Shields, 2004. "Money Does Matter! Evidence from Increasing Real Income and Life Satisfaction in East Germany Following Reunification," American Economic Review, American Economic Association, vol. 94(3), pages 730-740, June.
    8. Greenwood, Michael J. & Hunt, Gary L., 1989. "Jobs versus amenities in the analysis of metropolitan migration," Journal of Urban Economics, Elsevier, vol. 25(1), pages 1-16, January.
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    Cited by:

    1. Vatter, Johannes, 2012. "Well-being in Germany: What explains the regional variation?," FZG Discussion Papers 50, University of Freiburg, Research Center for Generational Contracts (FZG).

    More about this item

    Keywords

    Convergence; Hedonic Analysis; Happiness; Migration; Germany;

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