Cost of living differentials between Brazilian states: an application of the hedonic theory from a national household sample survey

Abstract

This paper aims to evaluate the cost of living differentials between Brazilian states using a hedonic price model and data from National Household Sample Survey for 2015. The identification strategy proposed is a quantile regression. Rent expenses are considered as a dependent variable, proxy for cost of living, while physical and locational characteristics are considered as independent variables. For all the quantiles analyzed, the results are in line with the literature and reveal significant divergences in the costs of living in different places. States located in the Northeast region have the lowest life costs of the country for any quantile, while Distrito Federal, São Paulo, Rio de Janeiro and Santa Catarina are considered as the most expensive states. These findings can be used by economic agents as regional deflators, contributing to analyses regarding to purchasing power parity in different locations.