A new test of the compensating wage differential model is proposed. The logic behind Jennifer Roback's model, which shows how differences in nonproduced amenities may be reflected in intercity wage differentials, is extended to the case of differences in local fiscal conditions, represented by...

Differences in local fiscal conditions generate compensating differentials across local land and labor markets just as the authors have known amenities to do. Thus, the local fiscal climate affects the quality of life across metropolitan areas. The authors present new results showing that...