Measuring Quality of Life under Spatial Friction
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Series
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Speaker(s)Tobias Seidel (University of Duisburg-Essen, Germany)
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FieldSpatial Economics
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LocationTinbergen Institute Amsterdam, room 1.01
Amsterdam -
Date and time
February 20, 2025
12:00 - 13:00
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 cost 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.