The Increasing Importance of Quality of Life

The US population has been migrating to places with high perceived quality of life. Theoretically, such migration can follow from the increasing demand for amenities that accompanies increasing wealth. Under the baseline calibration of a general equilibrium model, a place with amenities for which individuals would initially pay 5% of their income grows slightly faster than an otherwise identical place. As local quality of life becomes more important in determining relative population density, local productivity independently becomes less important. Together these two trends cause local amenities to eventually become the sole determinant of relative local density. From a quantitative perspective, high quality of life together with low relative productivity can boost metropolitan population growth by several percentage points