An Equilibrium Model of Sorting in an Urban Housing Market / Patrick Bayer, Robert McMillan, Kim Rueben.

Format:

Book

Author/Creator:

Bayer, Patrick.

Contributor:

National Bureau of Economic Research.

McMillan, Robert.

Rueben, Kim.

Series:

Working Paper Series (National Bureau of Economic Research) no. w10865.

NBER working paper series no. w10865

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2004.

Summary:

This paper introduces an equilibrium framework for analyzing residential sorting, designed to take advantage of newly available restricted-access Census microdata. The framework adds an equilibrium concept to the discrete choice framework developed by McFadden (1973, 1978), permitting a more flexible characterization of preferences than has been possible in previously estimated sorting models. Using data on nearly a quarter of a million households residing in the San Francisco Bay Area in 1990, our estimates provide a precise characterization of preferences for many housing and neighborhood attributes, showing how demand for these attributes varies with a household's income, race, education, and family structure. We use the equilibrium model in combination with these estimates to explore the effects of an increase in income inequality, the findings indicating that much of the increased spending power of the rich is absorbed by higher housing prices.

Notes:

Print version record

November 2004.