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Does Commuting Reduce Wage Disparities?

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  • Mihails Hazans

Abstract

This paper shows that in the Baltic countries, commuting reduces urban-rural wage and employment disparities and increases national output. To quantify the effect of commuting on wage differentials, two sets of earnings functions are estimated (based on Estonian, Latvian, and Lithuanian Labor Force Surveys) with location variables (capital city, rural, etc.) measured at the workplace and at the place of residence. We find that the "ceteris paribus" wage gap between capital city and rural areas, as well as between capital and other cities is significantly narrowed by commuting in some cases but remains almost unchanged in others. Different outcomes are explained by country-specific spatial patterns of commuting, educational and occupational composition of commuting flows, and presence or absence of wage discrimination against rural residents in urban markets. A treatment effects model is used to estimate individual wage gains to rural-urban or inter-city commuting; these gains are substantial in most but not all cases. Wage effects of commuting distance, as well as impact of education, gender, ethnicity, and local labor market conditions on the commuting decision are also explored. Copyright 2004 Gatton College of Business and Economics, University of Kentucky..

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Bibliographic Info

Article provided by Gatton College of Business and Economics, University of Kentucky in its journal Growth and Change.

Volume (Year): 35 (2004)
Issue (Month): 3 ()
Pages: 360-390

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Handle: RePEc:bla:growch:v:35:y:2004:i:3:p:360-390

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  1. Coulson, N Edward & Laing, Derek & Wang, Ping, 2001. "Spatial Mismatch in Search Equilibrium," Journal of Labor Economics, University of Chicago Press, vol. 19(4), pages 949-72, October.
  2. Hazans, Mihails, 2003. "Determinants of inter-regional migration in the Baltic countries," ZEI Working Papers B 17-2003, ZEI - Center for European Integration Studies, University of Bonn.
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  7. Zax, J.S. & Kain, J.F., 1991. "Moving to the Suburbs: Do Relocating Companies Leave Their Black Employees Behind?," Harvard Institute of Economic Research Working Papers 1562, Harvard - Institute of Economic Research.
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  11. Wasmer, Etienne & Zenou, Yves, 1999. "Does Space Affect Search? A Theory of Local Unemployment," CEPR Discussion Papers 2157, C.E.P.R. Discussion Papers.
  12. R.W. McQuaid, 2001. "Unemployed Job Seeker Attitudes towards Potential Travel-to-Work Times," Growth and Change, Gatton College of Business and Economics, University of Kentucky, vol. 32(3), pages 355-368.
  13. So, Kim Sui & Orazem, Peter & Otto, Daniel, 2009. "The Effect of Housing Prices, Wages, and Commuting Time on Joint Residential and Job Location Choices," Staff General Research Papers 4050, Iowa State University, Department of Economics.
  14. Wrede, Matthias, 2001. "Should Commuting Expenses Be Tax Deductible? A Welfare Analysis," Journal of Urban Economics, Elsevier, vol. 49(1), pages 80-99, January.
  15. Newell, Andrew T., 2001. "The Distribution of Wages in Transition Countries," IZA Discussion Papers 267, Institute for the Study of Labor (IZA).
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Cited by:
  1. Ieva Brauksa & Ludmila Fadejeva, 2013. "Internal Labour Market Mobility in 2005-2011: The Case of Latvia," Working Papers 2013/02, Latvijas Banka.
  2. Sandow, Erika & Westin, Kerstin, 2010. "The persevering commuter - Duration of long-distance commuting," Transportation Research Part A: Policy and Practice, Elsevier, vol. 44(6), pages 433-445, July.
  3. Budy P. Resosudarmo & Asep Suryahadi & Raden Purnagunawan & Athia Yumna & Asri Yusrina, 2009. "The Socioeconomic and Health Status of Rural–Urban Migrants in Indonesia," Development Economics Working Papers 23042, East Asian Bureau of Economic Research.
  4. Giovanni Russo & Federico Tedeschi & Aura Reggiani & Peter Nijkamp, 2011. "Commuter Effects on Local Labour Markets: A German Modelling Study," Tinbergen Institute Discussion Papers 11-114/3, Tinbergen Institute.
  5. Hazans, Mihails, 2005. "Unemployment and the earnings structure in Latvia," Policy Research Working Paper Series 3504, The World Bank.
  6. Mihails Hazans, 2003. "Returns to Education in the Baltic Countries," SSE Riga/BICEPS Research Papers 2003-1, Baltic International Centre for Economic Policy Studies (BICEPS) and Stockholm School of Economics in Riga (SSE Riga).

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