The Effect of Housing Costs on Household Transportation

Faye Khammo
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Faye Khammo: Monash University

Warwick-Monash Economics Student Papers from Warwick Monash Economics Student Papers

Abstract: We use individual-level panel data from Australia and a novel fixed-effect instrumental variable approach to estimate the causal effect of housing cost on five measures of household transportation; work commute time, relocation, and the respective expenditure share on motor vehicle fuel, public transport and taxi, and total transportation. The instrumental variable exploits arguably exogenous variation in housing costs induced by foreign investments that flow differentially into regions according to the past geographical distribution of immigrants. We find that rises in housing costs, measured by the composite opportunity costs faced by representative renters and owners living in an area, increase an individual’s work commute time and the probability of relocation, and lead to a shift in the individual’s expenditure away from fuel towards public transportation.

Keywords: Housing cost; Transportation cost; Commute time; Household relocation; Transportation expenditure; Transportation mode JEL classifications: R20; R21; R40; F21 (search for similar items in EconPapers)
Date: 2023
New Economics Papers: this item is included in nep-tre and nep-ure
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Persistent link: https://EconPapers.repec.org/RePEc:wrk:wrkesp:44

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