From Neighborhoods to Nations by Ioannides Yannis M.;

Author:Ioannides, Yannis M.;
Language: eng
Format: epub
Publisher: Princeton University Press

6.4.1 Self-Selection into Cities

Do individuals who self-select to move to and live in a city have above-average unobserved ability relative to the population? We can use the Roy model to analyze this question (Roy 1951). Let unobserved quality (ability) ψi for individual i take the place of human capital in determining individual income. Unobserved ability earns a return η in city . Returning to (6.3) and ignoring variations in the wage rate, we consider two alternative cities, and ’, where individual i would earn incomes yi = ψiη and yi’ = ψi’η’, respectively. Under the assumption that (In ψi, In ψ’i) are jointly normally distributed with means µ, µ’), variances , and covariance σ’ the mean ψi among those who choose over ’ is given by the conditional mean ψi:

Download

Copyright Disclaimer:
This site does not store any files on its server. We only index and link to content provided by other sites. Please contact the content providers to delete copyright contents if any and email us, we'll remove relevant links or contents immediately.