Evaluating the welfare effects of a location-based program in the presence of migration: A method and some examples
Sam Schulhofer-Wohl and
No 1371, 2011 Meeting Papers from Society for Economic Dynamics
Estimating the impacts of a place-based policy in a partial equilibrium setting often involves studying the effects on a few outcomes proximate to the policy in question. However, in much of the recent development literature devoted to evaluating the impact of location-specific investments, little attention is focused on measuring welfare effects when adjustments to the policy occur along a different margin: the margin of migration. This paper proposes an alternative method for estimating welfare effects of a place-based policy, taking into account migration and missing land and housing markets. We develop a simple model to show how a new infrastructure investment affects labor market outcomes and migration directly, and indirectly changes the probability of accessing other locally-specific goods. We show that if one can plausibly estimate the migration elasticity in response to the initial infrastructure investment, as well as the change in probability of accessing these other locally-specific goods in response to the new policy (i.e. the increase in the length of a "queue"), under some assumptions on the utility function and using data on prices of these local goods taken from other markets, the total impact on welfare of the initial location-based investment can be bounded.
References: Add references at CitEc
Citations: Track citations by RSS feed
Downloads: (external link)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:red:sed011:1371
Access Statistics for this paper
More papers in 2011 Meeting Papers from Society for Economic Dynamics Society for Economic Dynamics Marina Azzimonti Department of Economics Stonybrook University 10 Nicolls Road Stonybrook NY 11790 USA. Contact information at EDIRC.
Bibliographic data for series maintained by Christian Zimmermann ().