Quality of Life in a Dynamic Spatial Model
CESifo, Munich, 2020
CESifo Working Paper No. 8767
![](https://cesifo.org/DocImg/cesifo1_wp8767.jpg?c=1689237016)
We develop a dynamic spatial model in which heterogeneous workers are imperfectly mobile and forward-looking and yet all structural fundamentals can be inverted without assuming that the economy is in a stationary spatial equilibrium. Exploiting this novel feature of the model, we show that the canonical spatial equilibrium framework understates spatial quality-of-life differentials, the urban quality-of-life premium and the value of local non-marketed goods. Unlike the canonical spatial equilibrium framework, the model quantitatively accounts for local welfare effects that motivate many place-based policies seeking to improve quality of life.
Labour Markets
Resources and Environment