The new residence adjustment equation provides a dynamic forecast of income by place-of-work compared to place-of-residence in terms of New Economic Geography theory. It allows for policy simulations based on relative consumer prices, taxes, labor force availability, and commuting costs. This report displays the methodology of applying this equation to economic modeling with the example simulation for a transit project in the Connecticut, New Jersey, and New York metro area and how it influences the economy and the commuting flows between the local counties. Endogenous residence adjustment adds to the analytical capabilities of any policy analysis model.
