Compensating differentials in emerging labor and housing markets: Estimates of quality of life in Russian cities

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. The Institute for the Study of Labor (IZA) in Bonn is a local and virtual international research center and a place of communication between science, politics and business. IZA is an independent, nonprofit limited liability company (Gesellschaft mit beschränkter Haftung) supported by Deutsche Post World Net. The center is associated with the University of Bonn and offers a stimulating research environment through its research networks, research support, and visitors and doctoral programs. IZA engages in (i) original and internationally competitive research in all fields of labor economics, (ii) development of policy concepts, and (iii) dissemination of research results and concepts to the interested public. The current research program deals with (1) mobility and flexibility of labor, (2) internationalization of labor markets, (3) welfare state and labor market, (4) labor markets in transition countries, (5) the future of labor, (6) evaluation of labor market policies and projects and (7) The existence of compensating differentials in Russian labor and housing markets is examined using data from the Russian Longitudinal Monitoring Survey (RLMS) augmented by city and regional-specific characteristics from other sources. While Russia is undergoing transition to a market economy, we find ample evidence that compensating differentials for location-specific amenities exist in the labor and housing markets. Our estimated wage and housing value equations suggest that workers are compensated for differences in climate, environmental conditions, ethnic conflicts, crime rates, and health conditions, after controlling for worker characteristics, occupation, industry, and economic conditions, and various housing characteristics. Moreover, we find evidence that these compensating differentials exist even after controlling for the regional pay differences ("regional coefficients") used by the Russian government to compensate workers for living in regions that are designated as less desirable. We rank 953 Russian cities by quality of life as measured by a group of eleven amenities. Sizable variation in the estimated quality of life across cities exists. The highest ranked cities tend to be in relatively warm areas and areas in the western, European part of the country. In addition, our quality of life index is positively correlated with net migration into a region, suggesting workers are attracted to amenity-rich locations. Overall, we find that sufficient market equi...

Migration Flows and Quality of Life in a Metropolitan Area: the Case of Barcelona-Spain

“…If house rents/prices capitalise QoL differentials perfectly, then spatial equilibrium can be assumed and migration should be either inexistent or, at most, negligible as moving would neither improve household utility nor reduce firm costs (Rosen 1974(Rosen , 1979. Estimating wage income and housing expenditures as function of amenities is often used to estimate quality-of-life levels (Blomquist et al 1988;Gyourko and Tracy 1991;Stover and Leven 1992;Gabriel et al 2003, Berger et al 2008). …”

A Multi-Criteria Evaluation of the European Cities’ Smart Performance: Economic, Social and Environmental Aspects

“…First attempts originate from the hedonic pricing literature (Nordhaus and Tobin, 1972;Roback, 1982). Various amenities of urban life, such as pollution, climate, population density, unemployment and crime have been used in the calculations of rent and land differentials across urban areas (Liu, 1977;Rosen, 1979;Berger et al 2008). These calculations have served as the basis for constructing objective indices of the quality of life.…”

The capitalization of non-market attributes into regional housing rents and wages: evidence on German functional labor market areas

“…Following these authors, in particular cultural infrastructure such as restaurants, art museums, or movie theaters increase quality of life in a city and attract additional residents. Other studies indicate widening compensation differentials that reflect the rising demand for cultural amenities in developed countries [Florida, 2002, Costa and Kahn, 2003, Shapiro, 2006, as well as developing economies such as Russia [Berger et al, 2008], and China [Zheng et al, 2009].…”