We use the properties of competitive location equilibrium to study the relationship between the demand for education and the choice of primary residential location. Consumers can work and live in a comparatively high wage place where there are few edu...
We use the properties of competitive location equilibrium to study the relationship between the demand for education and the choice of primary residential location. Consumers can work and live in a comparatively high wage place where there are few education opportunities, or live in a place where education is available and commute to work. If education and employment are each location-specific, there are pooling equilibria in which consumers locate according to their preference for education. In general, the stronger the taste for education, the greater the attraction of living close to the education site and the lower the demand for other goods, including housing. Exploring the effects of the model parameters on the spatial distribution of consumers, we find that a higher frequency of trips taken to the education site, a shorter distance between the work place and the education site, or a greater out-of-pocket education cost each leads to a wider range of consumer types selecting to reside at the education location. We also find that a higher wage lowers the range of consumers who select to live near the education site.