Why living in a big city for a higher salary may not pay off

Is living in a big city worth the often bigger salary? Here's what economists say.

Dave Battersby and Cindy McAdam always planned a return to small-town life. The COVID-19 pandemic merely sped up the couple’s plans.

“It was extremely scary to pick up and move during the pandemic,” Battersby tells Global News.

In April 2020, they sold their 1,000 square-foot home in Toronto’s Davisville Village neighbourhood and moved to a 5,000-square foot home with a sprawling backyard and outdoor pool in Cobourg, Ont. The price difference between the two properties allowed them to purchase their new home mortgage-free, with money enough left over to buy investment property as part of their retirement plan.

“We have a home now where we can entertain guests. We have enough room that they can stay over as well,” says Battersby. “We have a pool that the kids have been enjoying every day during the summer months.”

Battersby, a director of media sales advertising, has since expanded his responsibilities while reducing his need to make the 1.5-hour commute to Toronto twice a week, without impacting his annual salary.

By greatly reducing their housing costs, they’ve managed to capitalize on big-city pay.

Researchers at the University of California at Berkeley and the U.S. Census Bureau released a report this month titled “Location, location, location” which digs into whether higher salaries in major urban centres are worth moving to the big city for. The report’s lead author, Canadian David Card, was named on Tuesday as a winner of the Nobel Prize in economics for his study of labour markets.

Their conclusion? It’s complicated.