A Logit Model of Intra-Urban Mobility

Working Papers 22 Loikkanen Heikki A.

In this paper we present results of a logit model which is used to explain the mobility of new Finnish housing allowance recipients during the three years after becoming eligible. As our theoretical framework we use a search model developed by the author elsewhere. In that model the household faces an imperfect market for rental housing and a perfect market for non-housing. The imprfections of the housing market include rent dispersion, imperfect information, search and transaction costs, availability uncertainty etc. In that framework househol equilibrium can be expressed as a set in housing quality and rent space. If the household´s present unit belongs to its equilibrium set it does not serach (and vice versa). The optimal policy of a disequilibrium household (searcher) ban be expressed by its acceptance set in housing quality and rent space. In our empirical application we first solve what is the best stochastically attainable housing size (instead of quality) and rent combination for each household. Then we construct a distance measure form that point to each household´s initial housing size and rent combination. By using our distance measure in explaining mobility we get as a result estimates of the boundaries of the equilibrium sets, and of how the probabilities of moving develop outside then equilibrium set.