The Effect of Gasoline Prices on Household Location

31 Pages Posted: 19 Jun 2010

See all articles by Raven Molloy

Raven Molloy

Board of Governors of the Federal Reserve System

Hui Shan

Board of Governors of the Federal Reserve System

Multiple version iconThere are 2 versions of this paper

Date Written: June 18, 2010

Abstract

Gasoline prices influence where households decide to locate by changing the cost of commuting. Consequently, the substantial increase in gas prices since 2003 may have reduced the demand for housing in areas far from employment centers, leading to a decrease in the price and/or quantity of housing in those locations relative to locations closer to jobs. Using annual panel data on ZIP codes and municipalities in a large number of metropolitan areas of the United States from 1981 to 2008, we find that a 10 percent increase in gas prices leads to a 10 percent decrease in construction after 4 years in locations with a long average commute relative to locations closer to jobs, but to no significant change in house prices. Thus, the supply response may prevent the change in housing demand from capitalizing in house prices. Because housing is durable, the resulting change in construction has a long-lived impact on the spatial distribution of housing units.

Keywords: Gasoline price, household location, housing

JEL Classification: Q31, R21, R23

Suggested Citation

Molloy, Raven and Shan, Hui, The Effect of Gasoline Prices on Household Location (June 18, 2010). FEDS Working Paper No. 2010-36. Available at SSRN: https://ssrn.com/abstract=1626967 or http://dx.doi.org/10.2139/ssrn.1626967

Raven Molloy

Board of Governors of the Federal Reserve System ( email )

20th Street and Constitution Avenue NW
Washington, DC 20551
United States

Hui Shan (Contact Author)

Board of Governors of the Federal Reserve System ( email )

20th Street and Constitution Avenue NW
Washington, DC 20551
United States
(202) 452 3491 (Phone)
(202) 728 5887 (Fax)

Register to save articles to
your library

Register

Paper statistics

Downloads
32
Abstract Views
473
PlumX Metrics