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Residential Amenities, Firm Location and Economic Development

Amenities are regarded as increasingly important to the location decisions of certain types of firm. Yet they are often ignored in economic development research because of the assumption that they attract only workers, and that this workforce, in turn, attracts firms. This paper argues for a reduced form model of the impact of amenities on corporate location. When testing such a model at the intra-metropolitan scale, it will be necessary to measure amenities not only at the potential worksite, but also where employees are likely to live. This paper tests such a firm location model using a sample of municipalities in northern New Jersey. Results support the hypothesis that firms evaluate certain amenities with respect to the likely residential locations of their employees.