Measuring quality of life under spatial frictions

Ahlfeldt, Gabriel M. ORCID: 0000-0001-5664-3230, Bald, Fabian, Roth, Duncan and Seidel, Tobias (2024) Measuring quality of life under spatial frictions. CEP Discussion Papers (CEPDP2061). London School of Economics and Political Science. Centre for Economic Performance, London, UK.

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Abstract

Using a quantitative spatial model as a data-generating process, we explore how spatial frictions affect the measurement of quality of life. We find that under a canonical parameterization, mobility frictions - generated by idiosyncratic tastes and local ties-dominate trade frictions - generated by trade costs and non-tradable services - as a source of measurement error in the Rosen-Roback framework. This non-classical measurement error leads to a downward bias in estimates of the urban quality-of-life premium. Our application to Germany reveals that accounting for spatial frictions results in larger quality-of-life differences, different quality-of-life rankings, and an urban quality-of-life premium that exceeds the urban wage premium.

Item Type:	Monograph (Discussion Paper)
Official URL:	https://cep.lse.ac.uk/_new/publications/discussion...
Additional Information:	© 2024 The Author(s)
Divisions:	Centre for Economic Performance
Subjects:	H Social Sciences > HC Economic History and Conditions
JEL classification:	J - Labor and Demographic Economics > J2 - Time Allocation, Work Behavior, and Employment Determination and Creation; Human Capital; Retirement J - Labor and Demographic Economics > J3 - Wages, Compensation, and Labor Costs R - Urban, Rural, and Regional Economics > R2 - Household Analysis R - Urban, Rural, and Regional Economics > R3 - Production Analysis and Firm Location R - Urban, Rural, and Regional Economics > R5 - Regional Government Analysis
Date Deposited:	06 Feb 2025 13:42
Last Modified:	11 Sep 2025 05:20
URI:	http://eprints.lse.ac.uk/id/eprint/126774

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