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Driving to Opportunity: Local Rents, Wages, Commuting Costs and Sub-Metropolitan Quality of Life

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  • David Albouy
  • Bert Lue

Abstract

We examine variation in local wage levels, housing costs, and commuting costs for 2071 areas covering the United States within and across metropolitan areas. In an equilibrium model of residential and workplace choice, we use these measures to construct a willingness-to-pay index for a typical household. When households are sufficiently homogeneous and mobile, this index indicates the perceived value of local household amenities, or “quality of life.” Wage levels vary little within metropolitan areas relative to across them, while individual characteristics that predict wages vary more within, suggesting patterns about sorting. Quality of life varies as much within metros as across them, and is typically high in areas that are dense, suburban, mild, safe, entertaining, and have higher school-funding.

Suggested Citation

  • David Albouy & Bert Lue, 2014. "Driving to Opportunity: Local Rents, Wages, Commuting Costs and Sub-Metropolitan Quality of Life," NBER Working Papers 19922, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:19922
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    Cited by:

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    3. Jordan Rappaport, 2014. "Monocentric city redux," Research Working Paper RWP 14-9, Federal Reserve Bank of Kansas City.

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    More about this item

    JEL classification:

    • H73 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Interjurisdictional Differentials and Their Effects
    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population
    • R41 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Transportation: Demand, Supply, and Congestion; Travel Time; Safety and Accidents; Transportation Noise

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