The effects of housing prices, wages, and commuting time on joint residential and job location choices

An empirical model of joint decisions of where to live and where to work de monstrates that individuals make residential and job location choices by tr ading off wages, housing prices, and commuting costs. Wages are higher in m etropolitan markets, but housing prices are also higher in urban areas. Con sumers can live in lower priced nonmetropolitan houses and still earn urban wages, but they incur commuting costs that increase with distance from the city. Improvements in transportation that lower commuting time will increa se nonmetropolitan populations and will increase the number of nonmetropoli tan commuters to metropolitan markets. Equal wage growth across labor marke ts causes a shift in relative population from rural to urban markets, while an equiproportional increase in housing prices causes a population shift t oward rural areas.