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March 02, 2006

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Even conceding inelastic supply of housing, I think that you have to take into account the fall in the real prices of all other goods that should result from more labor supply. This should compensate the one-earner household for the increased price of housing. The two-earner household will be richer than the one-earner household, but will have to put up with two sucky jobs instead of one. I'm a little out of practice with this stuff, maybe some micro gurus would like to take a stab at it...

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