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The Effects of Housing Prices, Wages, and Commuting Time on Urban-Rural Residential Choice


  • So, Kim Sui
  • Orazem, Peter
  • Otto, Daniel


An empirical model of joint decisions of where to live and where to work demonstrates that individuals make residential and job location choices by trading off wages, housing prices and commuting costs. Wages are higher in metropolitan markets, but housing prices are also higher in urban areas. Consumers can live in lower priced nonmetropolitan houses and still earn urban wages, but they incur commuting costs that increase with distance from the city. Improvements in transportation that lower commuting time will increase nonmetropolitan populations and will increase the number of nonmetropolitan commuters to metropolitan markets. Equal wage growth across labor markets causes a shift in relative population from rural to urban markets, while an equiproportional increase in housing prices causes a population shift toward rural areas.

Suggested Citation

  • So, Kim Sui & Orazem, Peter & Otto, Daniel, 2001. "The Effects of Housing Prices, Wages, and Commuting Time on Urban-Rural Residential Choice," Staff General Research Papers Archive 1204, Iowa State University, Department of Economics.
  • Handle: RePEc:isu:genres:1204

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    References listed on IDEAS

    1. Averett, Susan L & Hotchkiss, Julie L, 1995. "The Probability of Receiving Benefits at Different Hours of Work," American Economic Review, American Economic Association, vol. 85(2), pages 276-280, May.
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    Cited by:

    1. Cécile Détang-Dessendre & Florence Goffette-Nagot & Virginie Piguet, 2008. "Life Cycle And Migration To Urban And Rural Areas: Estimation Of A Mixed Logit Model On French Data," Journal of Regional Science, Wiley Blackwell, vol. 48(4), pages 789-824.
    2. Vifill Karlsson, 2011. "The Relationship of Housing Prices and Transportation Improvements: Location and Marginal Impact," Spatial Economic Analysis, Taylor & Francis Journals, vol. 6(2), pages 223-241.
    3. Sharma, Ajay & Chandrasekhar, S., 2014. "Growth of the Urban Shadow, Spatial Distribution of Economic Activities, and Commuting by Workers in Rural and Urban India," World Development, Elsevier, vol. 61(C), pages 154-166.
    4. Angela Stefania Bergantino & Leonardo Madio, 2015. "The Travel-to-work. Which factors matter? An analysis on regional labor market in UK," ERSA conference papers ersa15p888, European Regional Science Association.
    5. Daniel C. Monchuk & Maureen Kilkenny & Euan Phimister, 2014. "Rural Homeownership and Labour Mobility in the United States," Regional Studies, Taylor & Francis Journals, vol. 48(2), pages 350-362, February.
    6. Natalia Presman & Arie Arnon, "undated". "Commuting Patterns in Israel," Regional and Urban Modeling 283600076, EcoMod.

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