Ahlfeldt, Gabriel Bald, Fabian Roth, Duncan Seidel, Tobias
Year of Publication:
CESifo Working Paper No. 8767
We develop a dynamic spatial model in which heterogeneous workers are imperfectly mobile and forward-looking and yet all structural fundamentals can be inverted without assuming that the economy is in a stationary spatial equilibrium. Exploiting this novel feature of the model, we show that the canonical spatial equilibrium framework understates spatial quality-of-life differentials, the urban quality-of-life premium and the value of local non-marketed goods. Unlike the canonical spatial equilibrium framework, the model quantitatively accounts for local welfare effects that motivate many place-based policies seeking to improve quality of life.
Covid dynamic housing migration rents pollution productivity spatial equilibrium quality of life wages welfare