Identification and semiparametric estimation of equilibrium models of local jurisdictions

We develops a new model of household sorting in a system of residential neighborhoods. We show that this model is partially identified without imposing parametric restrictions on the distribution of unobserved tastes for neighborhood quality and the shape of the indirect utility function. The proof of identification is constructive and can be used to derive a new semiparameteric estimator. Our empirical application focuses on residential choices in the Pittsburgh metropolitan area. We find that sorting of households with children exhibit more stratification by income than sorting of households without children. (JEL C51, D12, H41, J12, R21, R23).