Heterogeneity in Local Housing and Labor Markets: Evidence from U.S. Cities Open Access
Downloadable ContentDownload PDF
Heterogeneity is a longstanding theme in the field of urban and regional economics, as identification often lies in spatial variations. This dissertation explores heterogeneity along various dimensions in the local housing and labor markets in the United States of America. The first chapter analyzes the heterogeneity in the capitalization of local consumption amenities in an intra-urban context at a fine scale. It proposes and tests a method for differentiating consumption amenities along a quality dimension, based on either consumer ratings or price estimates from Yelp.com. The results demonstrate that both the quality and quantity aspects of consumption amenities matter, and that consumer ratings are more informative about unobservable restaurant quality than price estimates. Furthermore, comparisons between the results for the pre- and post-Yelp periods show that such capitalization differentials are only observed when information on quality is readily available to and widely used by the public. The second chapter examines the inter-urban heterogeneity in the return to experience. Through theoretical discussions with the income elasticity hypothesis and housing preference hypothesis, it argues that some of the return to experience is driven by the compensating differentials associated with higher housing costs in larger cities. It demonstrates that the return to experience not only reflect increase in worker productivity, it also contains the compensating differentials that employers needed to pay to keep more experienced workers, whose housing demands are higher, in cities where house prices are higher.The third chapter models the heterogeneity in households' housing demand of workers in different age groups and the resulted location choice. Inspired by the life cycle consumption pattern for housing services that is observed in microdata, I propose a model featuring life cycle housing demand to demonstrate how young and older workers sort into different cities, due to increased demand for housing as one age. I empirically test the worker age compositions across occupation and city in association with housing costs. The results highlight the importance of the life-cycle housing demand in workers' location choice based on housing costs.