A Spatiotemporal Equilibrium Model of Migration and Housing Interlinkages

Abstract

This paper develops and solves a spatiotemporal equilibrium model in which regional wages and house prices are determined jointly with location-to-location migration flows. The agent's optimal location choice and the resultant migration process are shown to be Markovian, with the transition probabilities across all location pairs given as non-linear functions of wage and housing cost differentials, endogenously responding to migration flows. The model can be used for the analysis of spatial distribution of population, income, and house prices, as well as for the analysis of the entire dynamic process of shock spill-over effects in regional economies through location-tolocation migration. The model is estimated on a panel of 48 mainland U.S. states and the District of Columbia over the training sample and is shown to fit the data well over the evaluation sample (2000)(2001)(2002)(2003)(2004)(2005)(2006)(2007)(2008)(2009)(2010)(2011)(2012)(2013)(2014). The estimated model is then used to analyse the size and speed of spatial spill-over effects by computing spatiotemporal impulse responses of positive productivity and land-supply shocks to California, Texas, and Florida. The sensitivity of the results to migration elasticity, housing depreciation rate and local land supply conditions is also investigated.

A Bayesian Spatio-Temporal Analysis of Markets During the Finnish 1860s Famine

“…Finally, we have defined the neighbourhood based on border sharing, but it could be interesting to study whether addition of second-order neighbours (neighbours of neighbours) would affect the results, especially for urban towns surrounded by a single rural region. Further extensions to enable simultaneous modelling of multiple products could also be an interesting future venue (an alternative agent-based modelling approach to model multivariate spatio-temporal panel data was used in Cun and Pesaran (2021)).…”