Household location and income: a spatial analysis for British cities

Using information on the exact location of urban households in Britain for the period 2009-2013 we explore the validity of standard urban land use models by estimating the extent to which distance of residence from the city centre is a function of income. This is the first study of its kind for British cities. After controlling for household characteristics and access to transport, as well as city and time effects, and taking account of both spatial and serial correlation, we find a strong positive association between household’s income and distance from the city centre. We also estimate the income elasticity of demand for land and find that this is not large enough to support the view that richer households locate further from the city centre mainly because they prefer larger dwellings. Finally, we find that while poorer households live closer to the city centre, they have experienced increasing real incomes over the period relative to those who live further away. This supports the view that cities in Britain attract poor people rather than generate poverty.