The Residential Integration of Transnational Regional Economies : Evidence from the 2015 Swiss Franc Appreciation

This paper investigates the residential integration of transnational regional economies, comparing them with the standard national setting studied in urban economics. For this purpose, we construct a theoretical model for residential location choices for a transnational economy with integrated residence and labor market but with heterogeneous consumption, housing, and amenities. Thus, we associate this model with the empirical setting of the 2015 Swiss Franc (CHF) appreciation, which caused a reduction of the consumption goods' prices denominated in CHF in the Eurozone (EZ) regions at the Swiss borders. Hence, we find that Swiss border Municipalities experienced a 0.13-1.86% decrease in EZ residents' share and a 0.66-2.44% reduction in housing prices in the four years after the shock. Thus, we observe an increase in cross-border workers in these areas, which may explain this residential pattern. These results suggest that transnational economies can be residentially integrated, behaving like national urban and regional economies