Income and cost of living: Are less equal places more costly?

Harrison S. Campbell

Social Science Quarterly, 2021, vol. 102, issue 6, 2689-2705

Abstract: Objective This study empirically investigates the impact of economic inequality on the cost of living in U.S. metropolitan areas. Methods Using a special Census tabulation, a standard cost‐of‐living model is sequentially augmented with measures of poverty and income inequality in a cross‐sectional regression analysis of 90 metropolitan areas; interaction and regional effects are also explored. Results Higher costs of living are associated with increasing economic inequality, especially in the distribution of metropolitan income. The effects of household poverty are significant but less consistent. Conclusions Reducing economic inequality would produce benefits enjoyed by all metropolitan residents via lower living costs. The benefits are likely to be greater in large, fast growing areas where income disparities are pronounced.

Date: 2021
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