Do Two-earner Households Base Their Choice of Residential Location on Both Incomes?

Abstract

This article focuses on the role of individual incomes in the residential location decisions of two-earner households. Conventional studies often treat households as a black box and describe them by a single utility function. The article raises the question, "Is the household utility paradigm an adequate framework for understanding the location decisions of two-earner households?". It tests an implication of the household utility paradigm-the income-pooling hypothesis for location decisions. The results provide evidence for rejecting the hypothesis among childless families, but fail to provide evidence for rejecting it when children are present. The results raise the need to address intrahousehold dynamics in modelling location decisions.