Have Amenities Become Relatively More Important than Firm Productivity Advantages in Metropolitan Areas?

39 Pages Posted: 7 Sep 2008

See all articles by Richard Deitz

Richard Deitz

Federal Reserve Bank of New York - Research Group

Jaison R. Abel

Federal Reserve Bank of New York

Date Written: September 2008

Abstract

We analyze patterns of compensating differentials to determine whether a region's bundle of site characteristics has a greater net effect on household location decisions relative to firm location decisions in U.S. metropolitan areas over time. We estimate skill-adjusted wages and attribute-adjusted rents using hedonic regressions for 238 metropolitan areas in 1990 and 2000. Within the framework of the standard Roback model, we classify each metropolitan area based on whether amenities or firm productivity advantages dominate and analyze the extent to which these classifications change between 1990 and 2000. We then decompose compensating differentials into amenity and firm productivity advantage components and examine how these components change. Empirical results suggest that while the relative importance of amenities appears to have increased slightly between 1990 and 2000, firm productivity advantages continued to dominate amenities in the vast majority of metropolitan areas during this decade.

Keywords: compensating differentials, quality of life, productivity

JEL Classification: R23, R30

Suggested Citation

Deitz, Richard and Abel, Jaison R., Have Amenities Become Relatively More Important than Firm Productivity Advantages in Metropolitan Areas? (September 2008). FRB of New York Staff Report No. 344, Available at SSRN: https://ssrn.com/abstract=1264044 or http://dx.doi.org/10.2139/ssrn.1264044

Richard Deitz (Contact Author)

Federal Reserve Bank of New York - Research Group ( email )

33 Liberty Street
New York, NY 10045
United States

Jaison R. Abel

Federal Reserve Bank of New York ( email )

33 Liberty Street
New York, NY 10045
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
54
Abstract Views
696
rank
458,526
PlumX Metrics