SMU SOE Seminar (March 6, 2023): Skills, Migration, and Urban Amenities over the Life Cycle

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TOPIC:

SKILLS, MIGRATION, AND URBAN AMENITIES OVER THE LIFE CYCLE

ABSTRACT We examine sorting behavior across metropolitan areas by skill over individuals’ life cycles. We show that high-skill workers disproportionately sort into high-amenity areas, but do so relatively early in life. Workers of all skill levels tend to move towards lower-amenity areas during their thirties and forties. Consequently, individuals’ time use and expenditures on activities we identify as leisure on local amenities is U-shaped over the life cycle. This contrasts with well-documented life-cycle consumption profiles, which are hump-shaped and peak during middle age. We present evidence that the move towards lower-amenity (and lower-cost) metropolitan areas is driven by changes in the number of household children over the life cycle—individuals, particularly the college-educated, tend to move towards lower-amenity areas following the introduction of their first household child. We develop an equilibrium model of location choice, labor supply, and amenity consumption and introduces shocks to household composition that affect consumption choices and required home production time over time. Key to the model is a complementarity between leisure time and local amenities, which generates a link between the utility gained from these amenities and required home production. Since the value of local amenities is capitalized into housing prices, individuals will tend to move to lower-cost locations to avoid paying for a good they are not consuming. Click here to view the CV.
		PRESENTER Jason Faberman Federal Reserve Bank of Chicago
		RESEARCH FIELDS Labor Economics Employment & Firm Dynamics Urban Growth Agglomeration
		DATE: 6 March 2023 (Monday)
		TIME: 4pm - 5.30pm
		VENUE: Meeting Room 5.1, Level 5 School of Economics Singapore Management University 90 Stamford Road Singapore 178903

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