Spatial Cost of Living Indices and the Distribution of Public Goods

This paper develops cost of living (COL) indices that vary across space. While conventional indices adjust for differences in prices, the COL defined here also reflects access to public goods. This analysis relies on the structure of a residential sorting model to estimate the COL index for each of 226 metropolitan statistical areas (MSAs) in 1990 and 2000 in the United States. Empirical results show signifi-cant differences in the COL across the spatial landscape. This paper focuses on the Gini coefficient as a measure of inequality to demonstrate the distribution of public goods across the population.