The main purpose of this study is to propose and estimate a model of Korean rental housing choice using hierarchical logit analysis. The study focuses on the examination of how households choose their dwelling units in a complex rental housing market. The decision is viewed as a partial sequence process, beginning with the choice of rental housing tenure and finishing with a decision on the type of occupation. To examine an additional step in the urban spatial structure, hedonic price technique is incorporated into a hierarchical logit model. In addition, the separate effects of permanent and transitory components of measured income are examined through the instrumental variables method based on human capital theory. It is shown that the proposed model provides a potentially more useful method than another model, the multinomial logit, in analysing the Korean rental housing market.
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