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Urban Change and Poverty (1988) / Chapter Skim
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Part II: Background Papers
Income, Opportunities, and the Quality of Life of Urban Residents
Pages 65-101

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Select key terms on the right to highlight them within pages of the chapter.


From page 67...
... Traditional measures include household income, the poverty rate, and the unemployment rate, which are reported for residents of central cities, suburbs, small metropolitan areas, and rural areas. These measures are also disaggregated by demographic group for each residential category.
From page 68...
... This paper reviews what ~ known about the economic status of residents of large central cities compared with residents of sum urbs, small metropolitan areas, and rural areas. An ideal measure of economic status would take into account several factors: the future, distinguishing between permanent and temporary situations; the actual decision-making unit, whether independent individuals or closeknit groups; the full resources available, recognizing transactions in kind; the cost of living; and the amenities available, incorporating quality-of-life values (Danziger et al., 1981~.
From page 69...
... Urban residents are usually considered to be better off when their incomes ~d local employment rates are higher and poverty and unemployment rates are lower. In the past, a high share of manufacturing employment was considered a good sign, but recent shifts in the economic structure away from manufacturing and toward the service and information sectors have had a negative effect on urban economies based on manufacturing.
From page 71...
... 71 ~ ut oo cO ~ oo oo ~ .
From page 72...
... In contrast, suburban residents of large metropolitan areas have the highest household incomes, employment rate, and manufacturing employment share, as well as the lowest poverty and unemployment rates. 2 The household income figures reported in Table 1 are not adjusted for differences in the cost of living because of problems in constructing an acceptable index.
From page 73...
... In every case, suburban residents again have the highest incomes and lowest poverty rates. Nonmetropolitan residents have the lowest incomes and, except for households headed by white females, they also have the highest poverty rates.
From page 74...
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From page 75...
... 75 CD ~ 0O ~ ~ ~ ~ ~ eo CC CD ~ .
From page 77...
... 77 to Go C5)
From page 81...
... Yet, the traditional measures ignore quality-of-life factors, which can be important components in well-be~ng. As a first step toward incorporating quality of life into the analysis, the next section develops a framework for explaining earnings differences among urban residents.
From page 82...
... Workers pay for pleasant job characteristics, such as flexible hours, and receive premiums for unpleasant ones. The magnitude of observed earnings differences because of compensating wage differentials is determined by the tastes of workers, their ability to move from one job to another, and the range of job characteristics offered by employers in the labor market (R.
From page 83...
... The individual characteristics that are incorporated into the estimated wage equation are years of labor market experience (age - schooling - 6~; experience squared; years of schooling; number of children; and dummy variables for race, gender, enrollment in school, marital status, and the presence of health limitations. These variables are included in the mode} alone and are made to interact with one another as appropriate.
From page 84...
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From page 85...
... 85 U3 c~ ~ c~ o o ~ oo u: o co c9 0 0 e~ <9 o~ ~ 0 oo O4 ~ e~ 0 ~ 0 0 0 0 e~ 0 c9 <9 0 ~ O O ~ 0 ~ 0 ~ o o o o o o o o oo o o o o o o oo .
From page 86...
... The gender-children coefficient is -.254; that is, each child reduces a woman's wage by 25 cents per hour on average, presumably by restricting the range of accessible jobs in the labor market. Table 4 reveals that white household incomes exceed those of nonwhites.
From page 87...
... . Other noticeable differences include those attributable to race, gender, and 3An alternative explanation is that unmeasured characteristics of the workers living in central cities or of the jobs they hold lead to lower wages.
From page 88...
... 88 oo a, b4 3 :^ ._ v C)
From page 89...
... 89 a, ~ co ~ ~ ~ ~ 0 ~ ~ ~ co ~ e~ oo 0 1 1 1 1 1 CD —~ 00 0 o ~ o o .
From page 90...
... These quality-of-life values can then be used, along with traditional measures of economic status, to reflect more fully the well-being of urban residents in various locations. Our measure of quality of life thus augments traditional measures such as household money income.
From page 91...
... In the context of the housing market alone, one might expect to find a trade-off in the form of higher housing prices for more amenities. Our more comprehensive model, which allows for compensation in multiple markets, shows that the value of amenities is the sum of partial compensations in the housing and labor markets.
From page 92...
... 92 by L ·~ ~ ~ ~ o ._ ~ ~ ~ us ED Go Go o ._ so ._ x be ._ o ._ o o a' CC ._ o, o ._ 03 q)
From page 95...
... Quality-of-life index values for 24 selected large metropolitan areas are shown in Table 10. All of the metropolitan areas for which the traditional measures of economic status were given in Table 1 are included, except for Boston and Miami, which were excluded because of incomplete data.
From page 96...
... produced by household income and quaTity-of-life adjusted household income are similar, there are noticeable differences for cities with extreme QOLl values. For instance, Denver-Boulder has the 11th highest household income, but the 4th highest QOLI-adjusted household income because of its high quality of life.
From page 97...
... 97 and 20th, respectively, after adjusting their household incomes for low measured quality-of-life values. Similar quality-of-life adjusted household incomes could be calculated for those living in the central city or suburbs, in large or small metropolitan areas, or outside metropolitan areas.
From page 98...
... Quality-of-life adjusted income and household income are highly correlated as expected. The poverty and unemployment rates are more highly correlated with quaTity-o£life adjusted income than with unadjusted income.
From page 99...
... the manufacturing employment share of an area and its unemployment rate are positively correlated. Further computations were made for traditional measures by population size of area of residence and by demographic group.
From page 100...
... Comparisons across large metropolitan areas show that rankings based on quality of life are not correlated with rankings based on traditional measures of well-being. The quality-of-life premium is added to household income for each of the large metropolitan areas to obtain a qualityof-life adjusted income.
From page 101...
... Department of Commerce. Danziger, Sheldon, Robert Haveman, and Robert Plotnick 1981 How income transfer programs affect work, savings, and the income distribution: A critical review.


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