Driving to Opportunity: Local Rents, Wages, Commuting Costs and Sub-Metropolitan Quality of Life

Abstract

We examine variation in local wage levels, housing costs, and commuting costs for 2071 areas covering the United States within and across metropolitan areas. In an equilibrium model of residential and workplace choice, we use these measures to construct a willingness-to-pay index for a typical household. When households are sufficiently homogeneous and mobile, this index indicates the perceived value of local household amenities, or “quality of life.” Wage levels vary little within metropolitan areas relative to across them, while individual characteristics that predict wages vary more within, suggesting patterns about sorting. Quality of life varies as much within metros as across them, and is typically high in areas that are dense, suburban, mild, safe, entertaining, and have higher school-funding.