Implicit amenity prices and the location of retirees in England and Wales

Abstract

General equilibrium models in which compensation for local amenities occurs in both housing and labour markets have been widely used to generate implicit amenity prices and regional quality of life indices. An implication and prospective test of such models is that individuals who are outside the labour market have an incentive to locate in regions where amenities are capitalized into wages. In this article we construct a measure of the extent of amenity capitalization into wages for each county in England and Wales. We then test the multimarket amenity model by applying this measure to county-level data on the location of retirees. Our results provide strong support for the model.

Acknowledgements

We are grateful to AEA Technology and the Climatic Research Unit, University of East Anglia for providing data.