Sort of, see "Expensive Urban Real Estate Is a Consumption Choice": http://www.theatlantic.com/business/archive/2011/11/expensiv...

If coming to New York meant that you had to put four people in a three bedroom apartment that's uncomfortably far from a subway line, instead of buying a nice little condo in Omaha, this does not mean that you are not "really" better off than your counterpart in Omaha; it means that you have chosen to consume your extra wealth in the form of "living in New York" rather than in the form of spacious real estate, cheap groceries, and an easy commute.

I'd definitely concur with that statement. Location and living environment are definitely a factor in deciding to take a job somewhere else than where you are now.

Whether SF is 'nicer' than somewhere else is down to the individual's preferences.

Who hasn't said "That job looks interesting but the office location is a pain in the ass and will add 30 minutes each way to my commute"?

All else equal, yes. More demand means a higher price -- i.e., less compensation for the same talent.

Absolutely. I am an experienced software engineer in SF, and you would have to pay me WAY more money to live in Texas. The number is high enough that I would never realistically move there.

of course. it's much easier to get good talent in cities that are desirable to live in, even though the cost of living is 2x higher than bumble-fuck places. i know because i moved to a bumble-fuck place for a high salary, and a. i hate living here, and b. we interview a lot of people, and it is surprising how hard it is to find anyone even mid-level.. the only lucky breaks we get is if some sr developer happened to move to bumble-fuck because he got married and is raising a family there.