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Wages, Rents, Unemployment, and the Quality of Life

  • Matthias Wrede

    ()

Combining a spatial equilibrium model with a search-matching unemployment model, this paper analyzes the willingness to pay for regional amenities and the regional quality of life when wages, rents, and unemployment risk compensate for local amenities and disamenities. The results are compared with those obtained from the Rosen-Roback approach. Furthermore, the paper shows that the wage curve is negatively sloped for quasi-linear utility. Specifically, the wage rate increases and the unemployment ratio decreases in response to an increase in the amenity level if the amenity is marginally more beneficial to producers than to consumers. As an illustration of the unemployment-adjusted quality-of-life measure, the quality of life in West German counties is estimated.

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File URL: http://www-sre.wu.ac.at/ersa/ersaconfs/ersa13/ERSA2013_paper_00548.pdf
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Paper provided by European Regional Science Association in its series ERSA conference papers with number ersa13p548.

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Date of creation: Nov 2013
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Handle: RePEc:wiw:wiwrsa:ersa13p548
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  1. Blanchflower, David G & Oswald, Andrew J, 1990. " The Wage Curve," Scandinavian Journal of Economics, Wiley Blackwell, vol. 92(2), pages 215-35.
    • David G. Blanchflower & Andrew J. Oswald, 1995. "The Wage Curve," MIT Press Books, The MIT Press, edition 1, volume 1, number 026202375x, June.
  2. Gyourko, Joseph & Tracy, Joseph, 1991. "The Structure of Local Public Finance and the Quality of Life," Journal of Political Economy, University of Chicago Press, vol. 99(4), pages 774-806, August.
  3. David Card, 1995. "The Wage Curve: A Review," Journal of Economic Literature, American Economic Association, vol. 33(2), pages 285-299, June.
  4. repec:cup:cbooks:9780521875387 is not listed on IDEAS
  5. Bayer, Patrick & Keohane, Nathaniel & Timmins, Christopher, 2009. "Migration and hedonic valuation: The case of air quality," Journal of Environmental Economics and Management, Elsevier, vol. 58(1), pages 1-14, July.
  6. Deller, Steven C., 2009. "Wages, Rent, Unemployment and Amenities," Journal of Regional Analysis and Policy, Mid-Continent Regional Science Association, vol. 39(2).
  7. Jens Suedekum, 2003. "Increasing Returns and Spatial Unemployment Disparities," ERSA conference papers ersa03p44, European Regional Science Association.
  8. Stuart A. Gabriel & Stuart S. Rosenthal, 2004. "Quality of the Business Environment Versus Quality of Life: Do Firms and Households Like the Same Cities?," The Review of Economics and Statistics, MIT Press, vol. 86(1), pages 438-444, February.
  9. Thiess Buettner & Alexander Ebertz, 2009. "Quality of life in the regions: results for German Counties," The Annals of Regional Science, Springer, vol. 43(1), pages 89-112, March.
  10. Kentaro Nakajima & Takatoshi Tabuchi, 2011. "Estimating Interregional Utility Differentials," Journal of Regional Science, Wiley Blackwell, vol. 51(1), pages 31-46, 02.
  11. Bellmann, Lutz & Gerner, Hans-Dieter & Upward, Richard, 2011. "Job and Worker Turnover in German Establishments," IZA Discussion Papers 6081, Institute for the Study of Labor (IZA).
  12. repec:cup:cbooks:9780521698221 is not listed on IDEAS
  13. Christopher A. Pissarides, 2000. "Equilibrium Unemployment Theory, 2nd Edition," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262161877, June.
  14. Winters, John V., 2012. "Differences in Quality of Life Estimates Using Rents and Home Values," IZA Discussion Papers 6703, Institute for the Study of Labor (IZA).
  15. repec:dgr:uvatin:20020029 is not listed on IDEAS
  16. David Albouy, 2009. "The Unequal Geographic Burden of Federal Taxation," Journal of Political Economy, University of Chicago Press, vol. 117(4), pages 635-667, 08.
  17. Patrick Kline & Enrico Moretti, 2013. "Place Based Policies with Unemployment," American Economic Review, American Economic Association, vol. 103(3), pages 238-43, May.
  18. Roback, Jennifer, 1982. "Wages, Rents, and the Quality of Life," Journal of Political Economy, University of Chicago Press, vol. 90(6), pages 1257-78, December.
  19. Dale T. Mortensen & Christopher A. Pissarides, 1993. "Job Creation and Job Destruction in the Theory of Unemployment," CEP Discussion Papers dp0110, Centre for Economic Performance, LSE.
  20. Peter Nijkamp & Jacques Poot, 2005. "The Last Word on the Wage Curve?," Journal of Economic Surveys, Wiley Blackwell, vol. 19(3), pages 421-450, 07.
  21. Greenwood, Michael J, et al, 1991. "Migration, Regional Equilibrium, and the Estimation of Compensating Differentials," American Economic Review, American Economic Association, vol. 81(5), pages 1382-90, December.
  22. Lee, Chul-In, 2008. "Migration and the wage and unemployment gaps between urban and non-urban sectors: A dynamic general equilibrium reinterpretation of the Harris-Todaro equilibrium," Labour Economics, Elsevier, vol. 15(6), pages 1416-1434, December.
  23. Chen, Yong & Rosenthal, Stuart S., 2008. "Local amenities and life-cycle migration: Do people move for jobs or fun?," Journal of Urban Economics, Elsevier, vol. 64(3), pages 519-537, November.
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