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Title: A Dynamic Model of Location Choice and Hedonic Valuation

Citation Type: Miscellaneous

Publication Year: 2007

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Abstract: Hedonic equilibrium models allow researchers to recover willingness to pay for spatially delineated amenities by using the notion that individuals "vote with their feet." However, the hedonic literature and, more recently, the estimable Tiebout sorting model literature, have largely ignored both the costs associated with migration (financial and psychological), as well as the forward-looking behavior that individuals exercise in making location decisions. Each of these omissions could lead to biased estimates of willingness to pay. Building upon dynamic migration models from the labor literature, I estimate a fully dynamic model of individual migration at the national level that explicitly controls for moving costs and forward-looking behavior. By employing a two-step estimation routine, I avoid the computational burden associated with the full recursive solution and can then include a richly-specified, realistic state space. With this model,

Url: https://are.berkeley.edu/~ligon/ARESeminar/Papers/bishop07.pdf

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Authors: Bishop, Kelly C

Publisher: Duke University

Data Collections: IPUMS USA

Topics: Other

Countries: United States