Measuring Quality of Life Under Spatial Frictions

Gabriel M. Ahlfeldt, Fabian Bald, Duncan H.W. Roth, Tobias Seidel, Gabriel Ahlfeldt and Duncan Roth
Authors registered in the RePEc Author Service: Duncan Roth

No 11560, CESifo Working Paper Series from CESifo

Abstract: Using a quantitative spatial model as a data-generating process, we explore how spatial frictions affect the measurement of quality of life. We find that under a canonical parameterization, mobility frictions—generated by idiosyncratic tastes and local ties—dominate trade frictions—generated by trade costs and non-tradable services—as a source of measurement error in the Rosen-Roback framework. This non-classical measurement error leads to a downward bias in es-timates of the urban quality-of-life premium. Our application to Germany reveals that accounting for spatial frictions results in larger quality-of-life differences, different quality-of-life rankings, and an urban quality-of-life premium that exceeds the urban wage premium.

Keywords: housing; spatial frictions; rents; prices; productivity; quality of life; spatial equilibrium; wages (search for similar items in EconPapers)
JEL-codes: J20 J30 R20 R30 R50 (search for similar items in EconPapers)
Date: 2024
New Economics Papers: this item is included in nep-geo, nep-lma and nep-ure
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_11560

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