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The value of air quality and crime in Chile: a hedonic wage approach*

Published online by Cambridge University Press:  04 February 2011

FELIPE VÁSQUEZ LAVÍN
Affiliation:
Department of Economics, Universidad de Concepción, Casilla 160-C, Barrio Universitario, Concepción, Chile. Tel: 56 41/220 3203. Fax: 56 41/225 45 91. Email: fvasquez@udec.cl
JORGE DRESDNER
Affiliation:
Department of Economics, Universidad de Concepción, Casilla 160-C, Barrio Universitario, Concepción, Chile. Email: jdresdne@udec.cl
RENATO AGUILAR
Affiliation:
Department of Economics, Gothenburg University, Sweden. Email: Renato.Aguilar@economics.gu.se

Abstract

We estimate the implicit prices of the crime rate and airborne pollution in Chile, using spatially compensating price differentials in the housing and labor markets. We evaluate empirically the impact of different estimation strategies for the wage and rent equations, on the economic value of these two amenities. The results show that increments in the crime rate or in air pollution have a negative impact on welfare and that the estimated welfare measures and their variances are sensitive to selection bias, endogenous amenities and clustering effects. In contrast, the welfare measures do not seem to be very sensitive to the simultaneity bias.

Type
Research Article
Copyright
Copyright © Cambridge University Press 2011

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