Air Conditioning, Migration, and Climate-Related Wage and Rent Differentials

This paper explores whether the spread of air conditioning in the United States from 1960 to 1990 affected quality of life in warmer areas enough to influence decisions about where to live, or to change North-South wage and rent differentials. Using measures designed to identify climates in which air conditioning would have made the biggest difference, I found little evidence that the flow of elderly migrants to MSAs with such climates increased over the period. Following Roback (1982), I analyzed data on MSA wages, rents, and climates from 1960 to 1990, and find that the implicit price of these hot summer climates did not change significantly from 1960 to 1980, then became significantly negative in 1990. This contrary to what one would expect if air conditioning made hot summers more bearable. I presented evidence that hot summers are an inferior good, which would explain part of the negative movement in the implicit price of a hot summer, and evidence consistent with the hypothesis that the marginal person migrating from colder to hotter MSAs dislikes summer heat more than does the average resident of a hot MSA, which would also exert downward pressure on the implicit price of a hot summer.