Location-Specific Human Capital, Location Choice and Amenity Demand

Douglas Krupka

No 2987, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: The role of amenities in the flow of migrants has been debated for some years. This paper advances an original model of amenities that work through household production instead of directly through the utility function. Area characteristics (amenities) affect household production, causing certain kinds of human capital investments to be rewarded more than others. Area heterogeneity makes such investments location-specific, in that some areas’ characteristics will reward certain kinds of knowledge more than others. This specificity – along with a period of exogenous location (before migration can be carried out) – increases the opportunity costs of moving, diminishes migration flows between dissimilar locations and increases valuation of amenities which were present in the originating area. These theoretical results emphasize people’s sorting across areas and thus differ from the results of the standard model of compensating differentials. Empirical tests of the model’s predictions using NLSY79 data show that childhood investments affect migration flows in the way proposed by the model.

Keywords: location specificity; migration; amenities; human capital (search for similar items in EconPapers)
JEL-codes: J61 R23 (search for similar items in EconPapers)
Pages: 32 pages
Date: 2007-08
New Economics Papers: this item is included in nep-geo, nep-hrm, nep-knm, nep-mig and nep-ure
References: Add references at CitEc
Citations: View citations in EconPapers (8)

Published - revised version published in: Journal of Regional Science, 2009, 49 (5), 833 - 854

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Related works:
Journal Article: LOCATION‐SPECIFIC HUMAN CAPITAL, LOCATION CHOICE AND AMENITY DEMAND* (2009)
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