Working Paper: CEPR ID: DP15594
Authors: Gabriel Ahlfeldt; Fabrian Bald; Duncan Roth; Tobias Seidel
Abstract: 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.
Keywords: COVID; Dynamic; Housing; Migration; Rents; Pollution; Productivity; Spatial Equilibrium; Quality of Life; Wages
JEL Codes: J2; J3; R2; R3; R5
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| canonical spatial equilibrium framework (D58) | spatial differentials in quality of life (R12) |
| dynamic spatial model (DSM) (C69) | urban quality-of-life premium (R29) |
| dynamic spatial model (DSM) (C69) | valuations of local public goods (H41) |
| decrease in air pollution (Q53) | quality-of-life index (I31) |
| workers relocating from untreated to positively treated regions (R23) | higher expected utility in treated areas (R22) |
| policy effect on GDP (E20) | policy effect on population (J11) |