The Role of Migration Costs in Residential Sorting

Book Section

Economists generally employ two ‘revealed preference’ approaches to measure households’ preferences for non-market amenities—the hedonic and equilibrium sorting models. The conventional hedonic model assumes free mobility across space. Violation of this assumption can bias the estimates of household willingness to pay for local amenities. Mobility constraints are more easily handled by the sorting framework. In this chapter, we examine the role of migration costs in household residential sorting and apply these two models to estimate the willingness to pay for clean air in the USA and China. Our results demonstrate that ignoring mobility costs in spatial sorting will underestimate the implicit value of non-market amenities in both countries. Such a downward bias is larger in developing countries, such as China, where migration costs are higher.

Full Text

Duke Authors

Cited Authors

  • Liang, W; Song, R; Timmins, C

Published Date

  • January 1, 2021

Book Title

  • Urban Book Series

Start / End Page

  • 251 - 283

Digital Object Identifier (DOI)

  • 10.1007/978-3-030-74544-8_4

Citation Source

  • Scopus