Compensating Differentials and Evolution in the Quality-of-Life Among U.S. States

Search and matching in the housing market

“…With homogenous labor, pure consumption amenities should increase home prices but decrease wages (Roback, 1982) and so decrease the correlation between house prices and income. But the empirical evidence is consistent with our claims: in Gyourko and Tracy (1991), as in Gabriel et al (2003), any significant effects of amenities on wages and prices are almost always of the same sign, Rauch (1993) shows that cities with higher average education exhibit both higher housing prices and higher labor income, while Capozza et al (2004) show that prices depend positively on median real income and population in both pooled and fixed effects regression. Gallin (2006) and Mikhed and Zemčik (2009) cast doubt on the consistency of Capozza et al's (2004) estimates, given the inability to reject the null of no co-integrating relationship.…”

Demand substitution across US cities: Observable similarity and home price correlation

“…However, alternative specifications have been explored. See Appendix C. Other measures of city similarity are generally consistent with the types of controls in the quality of life and migration literature, which control for differences in distance (Davies et al, 2001), coastline (Blomquist et al, 1988;Gyourko and Tracy, 1991), age (Gabriel et al, 2003;Kennan and Walker, 2010a), education (Costa and Kahn, 2000;Chen and Rosenthal, 2008), house value/housing expenditures (Gyourko and Tracy, 1991;Kennan and Walker, 2010a), per capita income (Davies et al, 2001), and population density (Whisler et al, 2008). 26 There are seven categories for age (0-17, 18-24, 25-34, 35-44, 45-54, 55- 27 There are several reasons to prefer home price correlation to other priced-based measures such as wage or rent correlations.…”

Driving to opportunity: Local rents, wages, commuting, and sub-metropolitan quality of life

“…One concern with such an index is that it is sensitive to which amenities the researcher considers relevant. 2 Gabriel, Mattey, and Wascher (2003) factor in non-housing costs-of-living in addition to rents, albeit only at the state level. Not taking a stand on what amenities belong in the quality-of-life index, Beeson and Eberts (1989), Gabriel and Rosenthal (2004), and Chen and Rosenthal (2008) construct indices at the metro level based on how high wages are compared to rents, controlling only for worker and housing characteristics.…”