TY  - RPRT
        AU  - Ahlfeldt, Gabriel M.
AU  - Bald, Fabian
AU  - Roth, Duncan H.W.
AU  - Seidel, Tobias
        TI  - Measuring Quality of Life Under Spatial Frictions
        PY  - 2024/Dec/
        PB  - Institute of Labor Economics (IZA)
        CY  - Bonn
        T2  - IZA Discussion Paper
        IS  - 17549
        UR  - https://www.iza.org/index.php/publications/dp17549
        AB  - 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.
        KW  - housing
KW  - spatial frictions
KW  - rents
KW  - prices
KW  - productivity
KW  - quality of life
KW  - spatial equilibrium
KW  - wages
        ER  -