Abstract
The affordable housing issue is now at the center of public concerns. It reflects the growing difficulties households face in accessing housing in large cities. The interurban framework developed by Rosen (1979) and Roback (1982) posits that as housing costs increase with city size, wages should adjust accordingly to compensate for these higher costs and restore equilibrium. However, this relationship is far from automatic and may differ depending on workers’ skill levels. The objective of this work is to provide a robust measure of the relative compensation for housing costs between high-skilled and low-skilled workers in French cities, as well as its evolution over the 2012–2020 period. To do so, I propose an original method to construct a composite housing cost index that integrates all three segments of the French housing market: housing prices, private rents, and social housing. I also construct, based on the urban wage premia literature, local wage indexes by skill level. The results reveal two distinct periods: (i) a first 2012-2015 period in which both skill levels receive relatively similar levels of wage compensation; (ii) a second, from 2016 onward, in which housing costs rise and high-skilled are more compensated. Importantly, the findings show that public housing mitigates part of this divergence: excluding social housing from the index amplifies the estimated gap in compensation. This paper thus contributes to the understanding of affordable housing issues in France by highlighting a crucial yet often overlooked dimension: the unequal wage compensation for housing costs across skill levels.