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Compensating Differentials and Evolution in the Quality-of-Life Among U.S. States-REVISED May 2001

Author

Listed:
  • Stuart A. Gabriel
  • Joe P. Mattey
  • William L. Wascher

Abstract

This paper provides the first application of the compensating differential paradigm to the evaluation of the extent and sources of evolution in state quality-of-life. The compensating differentials approach derives from early work by Rosen (1979) and Roback (1982), who showed how to extract quality-of-life measures from compensating differentials in wages and house prices. To date, however, empirical analysis of compensating differentials generally has been cross-sectional in nature and provides little insight as to the extent or determinants of changes over time in the quality of life. In this paper, we provide estimates of the evolution in quality-of-life rankings for U.S. states over the 1981- 1990 period. Our findings indicate that the quality-of-life rankings are relatively stable across model specifications and over time for certain poorly ranked, densely-populated Midwestern and eastern industrial states and also for other high quality-of-life rural western states. However, we find substantial deterioration in quality-of-life rankings in some states that experienced rapid population growth during the decade. Reduced spending on infrastructure, increased traffic congestion, and air pollution account for the bulk of the deterioration in quality-oflife in these states. As would be expected, improvement in those same factors is shown to result in marked ascensionin quality-of-life ranks among other states.

Suggested Citation

  • Stuart A. Gabriel & Joe P. Mattey & William L. Wascher, 2001. "Compensating Differentials and Evolution in the Quality-of-Life Among U.S. States-REVISED May 2001," Working Paper 8631, USC Lusk Center for Real Estate.
  • Handle: RePEc:luk:wpaper:8631
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    File URL: http://lusk.usc.edu/sites/default/files/working_papers/wp_2001-1009.pdf
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    Cited by:

    1. Yuming Fu & Stuart A. Gabriel, 2001. "Transistions to Private Employment: Earnings Determination, Worker Employment Preferences, and Job Turnover in Urban China," Working Paper 8636, USC Lusk Center for Real Estate.

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