If households sort efficiently across locations, then at a given location families receive the same marginal benefit from the locational amenities. We test for such sorting by imposing cross-equation restrictions on hedonic regressions that difference away location- versus house-specific effects. Estimates are obtained using a unique subset of the American Housing Survey in which adjacent housing units are grouped together and observed in both 1985 and 1989. Rejection of the cross-equation restrictions unambiguously implies an inefficient sorting of households. In contrast, the data support the cross-equation restrictions which is a necessary but not sufficient condition for efficient sorting.
|Number of pages||20|
|Journal||Journal of Urban Economics|
|State||Published - Sep 1997|
Bibliographical noteFunding Information:
US. S. Rosenthal gratefully acknowledges financial support from the Real Estate Institute of British Columbia and the Social Science and Research Council of Canada SSHRC). We thank two anonymous referees, Jan Brueckner, Charles de BartolomÂe, Dennis Epple, Bob Helsley, Vernon Henderson, and William Strange for helpful comments. Any remaining errors, of course, are our own.
ASJC Scopus subject areas
- Economics and Econometrics
- Urban Studies