Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/336594 
Year of Publication: 
2025
Series/Report no.: 
Discussion Paper No. 544
Publisher: 
Ludwig-Maximilians-Universität München und Humboldt-Universität zu Berlin, Collaborative Research Center Transregio 190 - Rationality and Competition, München und Berlin
Abstract: 
We employ a quantitative spatial model that accounts for trade fritions - generated by trade costs and non-tradable services - and mobility frictions - generated by idiosyncratic tastes and local ties - to recover unobserved quality of life (QoL) and estimate the urban QoL premium. For Germany, we find that a city twice as large offers, on average, a 22% higher QoL to the average resident - far exceeding the urban wage premium of 4%. Our model-based Monte Carlo simulations suggest that the lack of strong empirical evidence for an urban QoL premium in earlier literature likely stems from measurement error in the Rosen-Roback framework due to omitted spatial frictions.
Subjects: 
Housing
spatial frictions
rents
prices
productivity
quality of life
spatial equilibrium
wages
JEL: 
J2
J3
R2
R3
R5
Document Type: 
Working Paper

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