The Effects of Housing Prices, Wages, and Commuting Time on Joint Residential and Job Location Choices

Abstract

An empirical model of joint decisions of where to live and where to work demonstrates that individuals make residential and job location choices by trading off wages, housing prices, and commuting costs. Wages are higher in metropolitan markets, but housing prices are also higher in urban areas. Consumers can live in lower priced nonmetropolitan houses and still earn urban wages, but they incur commuting costs that increase with distance from the city. Improvements in transportation that lower commuting time will increase nonmetropolitan populations and will increase the number of nonmetropolitan commuters to metropolitan markets. Equal wage growth across labor markets causes a shift in relative population from rural to urban markets, while an equiproportional increase in housing prices causes a population shift toward rural areas.

Housing prices and inter-urban migration

“…However, it is reasonable to treat households as price-takers in labor and housing markets and, thus, the effects of wages and housing prices on migration decisions can be measured in studies using household data. In such studies, higher relative wages or income are consistently found to increase the probability that a household will select a given location, all else equal (Berger and Blomquist 1992, Davies et al 2001, So et al 2001, Hunt and Mueller 2004, Bayer et al 2008, Bishop 2008, Kennan and Walker 2009, Dahl and Sorenson 2010. In contrast, the results for housing prices are much less clear.…”

“…While housing prices clearly matter for moves in both cases, we are primarily interested in their effect on migration at the scale of metropolitan areas, counties, and states. Intra-area studies that examine effects of housing prices on household location decisions include Chan (2001), So et al (2001), Engelhardt (2003), Seig et al (2004), andFerreira et al (2010). 2 Chen and Rosenthal (2008) construct area-level quality of life indices that reflect wages and housing prices.…”

Locational Choices and the Costs of Distance: Empirical Evidence for Dutch Graduates

“…At the same time, the commuting distances of older individuals are generally shorter than those of younger persons (Manaugh et al, 2010;Plaut, 2006;Susilo and Maat, 2007), supposedly since younger workers are more likely to have the energy required to realize lengthy, time-consuming commutes (So et al, 2001). …”

“…Correspondingly, Venhorst et al (2011) established that female college graduates are more likely than their male equivalents to cover large college-to-work distances when starting their first job after graduation. At the same time, females generally have shorter commutes than males (Crane, 2007;Manaugh et al, 2010;Plaut, 2006;Sang et al, 2011;Shuttleworth and Gould, 2010;Susilo and Maat, 2007), possibly due to the gender-specific allocation of domestic responsibilities (Rouwendal and Nijkamp, 2004;Schwanen et al, 2002;, or because women tend to attach a larger value on the disutility of commuting than men (So et al, 2001). We thus hypothesize that the distance between a graduate's place of study and workplace will be larger for female graduates and, since we expect women to have shorter commutes, we assume their college-to-residence distances to be longer than those of men.…”

“…Accordingly, Clark and Cosgrove (1991) found that singles migrate across larger distances than individuals having a partner. Furthermore, commuting distances have been found to decrease with the number of persons in a worker's household (Manaugh et al, 2010;Schwanen et al, 2002), and are lower for employees with dependent children (Manaugh et al, 2010;Susilo and Maat, 2007), supposedly since the coordination of domestic and professional responsibilities becomes more difficult with distance (So et al, 2001). We therefore hypothesize the distance between a graduate's place of study and workplace to be smaller for married graduates, and for those having children, bringing about shorter commutes as well as a shorter distances between the place of study and the place of residence.…”