The Real Price of Schnitzel: Regional Price Levels and Purchasing Power in Austria

In this thesis, I calculate novel regional purchasing power indices for all Austrian districts. First, I estimate distinct consumption patterns for each Austrian district and combine the resulting expenditure weights with regional price data to determine the regional price indices at the district level. Next, I use income indices on the regional level in combination with the price indices estimated beforehand to obtain each district’s regional purchasing power. I find that regional price indices vary by 10% even in a small country like Austria, with urban and touristic western districts being the most expensive. Housing, particularly rent, strongly influences regional price indices. Interestingly, regional price indices are uncorrelated with disposable income per capita, which is lower in urban centers. Regional purchasing power is highest in suburban regions, especially around Vienna, and lowest in the capital.