The Role of Non-Pecuniary Considerations: Location Decisions of College Graduates from Low Income Backgrounds

Abstract

We examine the initial post-college geographic location decisions of students from hometowns in the Appalachian region that often lack substantial high-skilled job opportunities, focusing on the role of non-pecuniary considerations. Novel survey questions in the spirit of the contingent valuation approach allow us to measure the full non-pecuniary benefits of each relevant geographic location, in dollar equivalents. A new specification test is designed and implemented to provide evidence about the quality of these non-pecuniary measures. Supplementing perceived location choice probabilities and expectations about pecuniary factors with our new non-pecuniary measures allows us to estimate a stylized model of location choice and obtain a comprehensive understanding of the importance of pecuniary and non-pecuniary factors. We also combine the non-pecuniary measures with realized location and earnings outcomes to characterize inequality in overall welfare.

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