Do Preferences for Urban Amenities Really Differ by Skill?

Abstract

City-level policies often aim at attracting skilled workers by improving urban amenities. However,due to endogeneity problems, studies relying on revealed preferences have difficulties in providingevidence for the basic premise that skilled workers place a higher value on urban amenities thanless skilled individuals. Therefore, we use a stated-preference experiment to directly examinepreferences for urban amenities. In a custom survey, we elicit hypothetical job choices betweentwo cities that differ in wages and a set of urban amenities. We find that amenities are importantdeterminants of city choice, with respondents willing to forgo a significant fraction of their wage tolive in a city with better amenities. Most strikingly, we do not find any preference heterogeneitybetween workers differing by education or creative class membership. Instead, we uncover largeheterogeneities mainly along family-related mobility constraints and unobserved dimensions. Ourresults imply that there is not much scope for amenity-oriented policies to improve the local skillmix. Rather, the urban skill bias reflects the incapability of less skilled individuals to afford livingin and moving to their preferred places, resulting in significant welfare losses.