Transportation and Quality of Life: Evidence from Denmark

This paper investigates the importance of transportation for quality of life in Denmark. We first calibrate a simple general equilibrium model to analyse how local wage levels, housing costs, and commuting costs vary across urban areas as well as to construct a quality of life index that measures a representative household’s willingness to pay for local amenities. We find that the quality of life is high in large cities. Wages and rents are also substantially higher in urban areas. We then regress the quality of life index on observed amenities to infer how quality of life is associated with transportation. Our empirical results suggest that the quality of the public transport system is particularly important for the quality of life.