Wages and Commuting: Quasi-natural Experiments' Evidence from Firms that Relocate

We examine individual-level compensating differentials for commuting distance in a quasi-natural experiment setting by examining how wages respond to changes in commuting distance induced by firm relocations. This set-up enables us to test for the relevance of job search frictions within labour mark...

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Bibliographic Details
Published in:The Economic journal (London) 2014-09, Vol.124 (579), p.1086-1105
Main Authors: Mulalic, Ismir, Van Ommeren, Jos N., Pilegaard, Ninette
Format: Article
Language:English
Subjects:
Commuting
Economic analysis
Economic models
Economic theory
Employees
Higher education
Industry
Job hunting
Labor economics
Labor markets
Labour market
Labour relations
Relocation
Standard error
Studies
Transport costs
Unemployment
Urban economics
Wage behaviour
Wages & salaries
Workplaces
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Summary:We examine individual-level compensating differentials for commuting distance in a quasi-natural experiment setting by examining how wages respond to changes in commuting distance induced by firm relocations. This set-up enables us to test for the relevance of job search frictions within labour market models. Due to the quasi-experimental set-up, we are able to avoid a range of endogeneity issues. We demonstrate that a 1 km increase in commuting distance induces an almost negligible wage increase in the year after the relocation but a more substantial wage increase of about 0.15% three years later.
ISSN:0013-0133
1468-0297
DOI:10.1111/ecoj.12074