The Increasing Importance of Quality of Life

The U.S. population has been migrating to places with high perceived quality of life. With homothetic preferences, such migration can follow from the increased demand for amenities that accompanies broad-based technological progress. Under the baseline calibration of a general equilibrium model, a place with amenities for which individuals would initially pay five percent of their income grows slightly faster than an otherwise identical place. As quality of life becomes more important in determining relative population density, productivity independently becomes less important. Asymptotically, local amenities are the sole determinant of relative density. High quality of life together with low relative productivity can boost metropolitan population growth by several percentage points. JEL Classification: O40, R12, R13