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2011-02-04 | Peer Reviewed

The Value of Air Quality and Crime in Chile: A Hedonic Wage Approach

Vásquez Lavín, Felipe, Jorge Dresdner Cid and Renato Aguilar. 2011. “The Value of Air Quality and Crime in Chile: A Hedonic Wage Approach.” Environment and Development Economics 16:03: 329-355.
Download reference Doi:10.1017/S1355770X10000483

We estimate the implicit prices of crime rates 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 air pollution have a negative impact on welfare and that the estimated welfare measures and their variance 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.