Discussion Paper Details

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Title: Who Lives Where in the City? Amenities, Commuting and Income Sorting

Author(s): Carl Gaigné, Hans R.A. Koster, Fabien Moizeau and Jacques-François Thisse

Publication Date: April 2017

Keyword(s): amenities, cities, commuting, Income and social stratification

Programme Area(s): International Trade and Regional Economics

Abstract: 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.

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Bibliographic Reference

Gaigné, C, Koster, H, Moizeau, F and Thisse, J. 2017. 'Who Lives Where in the City? Amenities, Commuting and Income Sorting'. London, Centre for Economic Policy Research.