Hedonic Migration Decisions and the Effect of Region Specific Amenities on Industrial Location: Could Silicon Valley be in South Dakota?
Hans-Peter Kohler
Abstract: This paper analyzes the effect of hedonic migration decisions and regional amenities on industrial location. Labor-intensive firms bifurcate into companies that follow the workers completely to the most attractive places, and companies which engage in a trade-off between `following' and `compensation for disamenities'. In the latter case, regional amenities induce three distinct location patterns: (a) a concentration of firms where the level of amenities is rapidly changing, (b) a gradual change of industrial composition at intermediate locations, and (c) a concentration of specific industries at the periphery of high amenity areas. These patterns explain some of the controversial empirical findings about regional amenities and migration.