A HEDONIC MODEL OF INTERREGIONAL WAGES, RENTS, AND AMENITY VALUES*

Authors

  • John P. Hoehn,

    1. Assistant Professor of Agricultural Economics, Michigan State University; Associate Professor of Economics, University of Kentucky; and Associate Professor of Economics and Public Administration, University of Kentucky, respectively.
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  • Mark C. Berger,

    1. Assistant Professor of Agricultural Economics, Michigan State University; Associate Professor of Economics, University of Kentucky; and Associate Professor of Economics and Public Administration, University of Kentucky, respectively.
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  • Glenn C. Blomquist

    1. Assistant Professor of Agricultural Economics, Michigan State University; Associate Professor of Economics, University of Kentucky; and Associate Professor of Economics and Public Administration, University of Kentucky, respectively.
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  • *

    Preliminary papers were presented at the Association of Environmental and Resource Economists/Allied Social Science Association Meetings in Dallas on December 29-30, 1984, and the Midwest Economics Association Meetings in Cincinnati on March 28-30, 1985. Helpful comments were made by Steven Cobb, Alan Dillingham, Shelby Gerking, Carol Gilbert, Philip Graves, F. Reed Johnson, Ronald Krumm, Ralph Luken, George Parsons, William Schulze, V. Kerry Smith, George Tolley, two anonymous referees, and participants in seminars at several universities including Chicago, Colorado, Kentucky, Toledo, Wyoming, and Vanderbilt. Support from U.S.E.P.A. Cooperative Agreement 811056-01-0 is gratefully acknowledged. Research Assistance was provided by Werner Waldner, Randy Parker, and Lisa Allison. The views expressed are the authors' alone. The sequence of authorship has been randomly assigned.

Abstract

ABSTRACT This paper develops a general multimarket hedonic model appropriate for a national, interregional study of wages, housing prices, and location-specific amenities. The model encompasses the effects of interregional location, intraurban location, and city size. Typically, hedonic studies focus on a single market such as labor or housing and ignore interactions implicit in a more global compensation mechanism. Examination of the comparative statics of our model indicates that single-market differentials are partial prices and are unreliable measures of amenity values in an interregional context. Unbiased amenity values are estimated for a comprehensive set of amenities using data on housing prices for 34,414 households and wages for 46,004 workers from the 1980 Census of Population and Housing. Statistically significant differences in housing prices and wages are found due to amenities.

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