TY  - JOUR
AU  - Bayer,Patrick
AU  - McMillan,Robert
AU  - Rueben,Kim
TI  - An Equilibrium Model of Sorting in an Urban Housing Market
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 10865
PY  - 2004
Y2  - November 2004
UR  - http://www.nber.org/papers/w10865
L1  - http://www.nber.org/papers/w10865.pdf
N1  - Author contact info:
Patrick Bayer
Department of Economics
Duke University
213 Social Sciences
Durham, NC 27708
Tel: 919/660-1832
E-Mail: patrick.bayer@duke.edu

Robert McMillan
University of Toronto
Department of Economics
150 St. George Street
Toronto, ON M5S 3G7
CANADA
Tel: 416/978-4190
Fax: 416/978-6713
E-Mail: mcmillan@chass.utoronto.ca

Kim Rueben
Urban Institute
2100 M Street NW
Washington DC 20037
Tel: 202-261-5662
Fax: Senior Research Associate
E-Mail: krueben@ui.urban.org
AB  - 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.
ER  -