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Commuting, Wages and Bargaining Power

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  • Rupert, Peter

    ()
    (University of California, Santa Barbara)

  • Stancanelli, Elena G. F.

    ()
    (CNRS, Sorbonne Economics Research Center (CES))

  • Wasmer, Etienne

    ()
    (Sciences Po, Paris)

Abstract

A search model of the labor market is augmented to include commuting time to work. The theory posits that wages are positively related to commute distance, by a factor itself depending negatively on the bargaining power of workers. Since not all combinations of distance and wages are accepted, there is non-random selection of accepted job offers. We build on these ingredients to explore in the data the relationship between wages and commute time. We find that neglecting to account for this selection will bias downward the wage impact of commuting, and marginally affect the coefficients on education, age and gender. The correlation between the residuals of the selectivity equation and the distance equation is -0.70, showing the large impact of commute time on job acceptance decisions. We also use the theory to calculate the bargaining power of workers which largely varies depending on demographic groups: it appears to be much larger for men than that for women and that the bargaining power of women with young children is essentially zero.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 4510.

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Length: 30 pages
Date of creation: Oct 2009
Date of revision:
Publication status: published in: Annales d'Economie et de Statistiques, 2009, (95 - 96), 201 - 221
Handle: RePEc:iza:izadps:dp4510

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Keywords: simultaneous equations; search model; commuting;

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References

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  1. Pierre Cahuc & Fabien Postel-Vinay & Jean-Marc Robin, 2003. "Wage bargaining with on-the-job search : theory and evidence," Research Unit Working Papers, Laboratoire d'Economie Appliquee, INRA 0212, Laboratoire d'Economie Appliquee, INRA.
  2. Gautier, Pieter & Zenou, Yves, 2008. "Car Ownership and the Labor Market of Ethnic Minorities," IZA Discussion Papers 3814, Institute for the Study of Labor (IZA).
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  4. Berg, G.J. van den & Gorter, C., 1996. "Job search and commuting time," Serie Research Memoranda, VU University Amsterdam, Faculty of Economics, Business Administration and Econometrics 0001, VU University Amsterdam, Faculty of Economics, Business Administration and Econometrics.
  5. Bloemen, Hans G & Stancanelli, Elena G F, 2001. "Individual Wealth, Reservation Wages, and Transitions into Employment," Journal of Labor Economics, University of Chicago Press, University of Chicago Press, vol. 19(2), pages 400-439, April.
  6. John M. Abowd & Francis Kramarz, 1992. "A Test of Negotiation and Incentive Compensation Models Using Longitudinal French Enterprise Data," NBER Working Papers 4044, National Bureau of Economic Research, Inc.
  7. Diamond, Peter A, 1982. "Wage Determination and Efficiency in Search Equilibrium," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 49(2), pages 217-27, April.
  8. Lucas, Robert Jr. & Prescott, Edward C., 1974. "Equilibrium search and unemployment," Journal of Economic Theory, Elsevier, Elsevier, vol. 7(2), pages 188-209, February.
  9. Gaumont, Damien & Schindler, Martin & Wright, Randall, 2006. "Alternative theories of wage dispersion," European Economic Review, Elsevier, Elsevier, vol. 50(4), pages 831-848, May.
  10. P. Diamond, 1980. "Mobility Costs, Frictional Unemployment and Efficiency," Working papers, Massachusetts Institute of Technology (MIT), Department of Economics 257, Massachusetts Institute of Technology (MIT), Department of Economics.
  11. International Monetary Fund, 2006. "Equilibrium Wage Dispersion," IMF Working Papers, International Monetary Fund 06/19, International Monetary Fund.
  12. Shihe Fu & Stephen L. Ross, 2010. "Wage Premia in Employment Clusters: Agglomeration or Worker Heterogeneity?," Working Papers, Center for Economic Studies, U.S. Census Bureau 10-04, Center for Economic Studies, U.S. Census Bureau.
  13. Alan Manning, 2003. "The Real Thin Theory: Monopsony in Modern Labour Markets," CEP Discussion Papers, Centre for Economic Performance, LSE dp0564, Centre for Economic Performance, LSE.
  14. David Roodman, 2009. "Estimating Fully Observed Recursive Mixed-Process Models with cmp," Working Papers, Center for Global Development 168, Center for Global Development.
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  16. repec:dgr:uvatin:2008106 is not listed on IDEAS
  17. Jos van Ommeren & Gerard J. van den Berg & Cees Gorter, 2000. "Estimating the Marginal Willingness to Pay for Commuting," Journal of Regional Science, Wiley Blackwell, Wiley Blackwell, vol. 40(3), pages 541-563.
  18. Wasmer, Etienne & Zenou, Yves, 1999. "Does Space Affect Search? A Theory of Local Unemployment," CEPR Discussion Papers, C.E.P.R. Discussion Papers 2157, C.E.P.R. Discussion Papers.
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Citations

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Cited by:
  1. Peter Rupert & Etienne Wasmer, 2009. "Housing and the Labor Market: Time to Move and Aggregate Unemployment," Sciences Po publications, Sciences Po info:hdl:2441/5l6uh8ogmqi, Sciences Po.
  2. Eva Garcia-Moran & Zoe Kuehn, 2012. "With Strings Attached: Grandparent-Provided Child care, Fertility, and Female Labor Market Outcomes," CEPRA working paper, USI Università della Svizzera italiana 1202, USI Università della Svizzera italiana.
  3. García-Morán, Eva & Kuehn, Zoe, 2013. "With strings attached: Grandparent-provided child care and female labor market outcomes," MPRA Paper 48953, University Library of Munich, Germany.
  4. García-Morán, Eva & Kuehn, Zoe, 2012. "With strings attached: Grandparent-provided child care, fertility, and female labor market outcomes," MPRA Paper 37001, University Library of Munich, Germany.

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