Do households prefer to move up or down the urban hierarchy during an economic crisis?

Abstract

In this paper, we investigate the relationship between adverse economic circumstances and the desire of Dutch households to move up or down the urban hierarchy. We apply three consecutive waves of the Dutch Housing Demand Survey (WoON) in a repeated cross-section setting, with data collected at the time of the Global Financial Crisis (GFC) and its aftermath. We find that households desire to move down the urban hierarchy during the volatile and uncertain periods following the GFC. This is a surprising result, given that urban areas are generally considered more opportunity rich. In order to uncover the mechanisms driving this result, we considered the impact of the economic circumstances on the general willingness to move and on the underlying motives. We find that willingness to move increased when the adverse economic consequences of the GFC hit Dutch households. Further, it appears that this willingness to move is only partially related to work. Besides work, desires to move for health, education, vicinity to family and friends, and reasons related to the dwelling, also become more prevalent during the aftermath of the GFC as well. This heterogeneity in impacts and consequences for household desired mobility serves to explain some of the mixed results in the literature, and generates lessons for current and future crises such as the Covid-19 pandemic.