Who Lives Where in the City? Amenities, Commuting and Income Sorting
100 Pages Posted: 21 Apr 2017 Last revised: 10 Dec 2018
Date Written: April 2017
We study the sorting of income-heterogeneous consumers within cities. We allow for non-homothetic preferences and locations that are differentiated by their distance to employment centers and accessibility to exogenous amenities. The residential equilibrium is driven by the properties of an amenity-commuting aggregator obtained from the primitives of the model. Using micro-data on the Randstad (the Netherlands), we find that doubling the amenity level, resp. commuting time, attracts households whose incomes are 1 -2:5% higher, resp. 6 - 17:5% lower. Using the model's estimated parameters, we predict the impact of changes in accessibility to jobs and amenities on the social structure of the Randstad.
Keywords: amenities, cities, commuting, Income, social stratification
JEL Classification: R14, R23, R53, Z13
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