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Commuting, Wages and Bargaining Power

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  • Elena Stancanelli

    (Théorie économique, modélisation et applications (THEMA))

  • Peter Rupert

    (Department of economics (UCSB))

  • Etienne Wasmer

    (Département d'économie)

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 oung children is essentially zero.

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Bibliographic Info

Paper provided by Sciences Po in its series Sciences Po publications with number 2009-02.

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Date of creation: Feb 2009
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Handle: RePEc:spo:wpmain:info:hdl:2441/10031

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  1. Bloemen, H.G. & Stancanelli, E.G.F., 1997. "Individual Wealth, Reservation Wages and Transitions into Employment," Discussion Paper, Tilburg University, Center for Economic Research 1997-02, Tilburg University, Center for Economic Research.
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  7. Pieter A. Gautier & Yves Zenou, 2008. "Car ownership and the Labor Market of Ethnic Minorities," Tinbergen Institute Discussion Papers, Tinbergen Institute 08-106/3, Tinbergen Institute.
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  14. George J. Stigler, 1961. "The Economics of Information," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 69, pages 213.
  15. Pieter A. Gautier & Yves Zenou, 2008. "Car ownership and the Labor Market of Ethnic Minorities," Tinbergen Institute Discussion Papers, Tinbergen Institute 08-106/3, Tinbergen Institute.
  16. Damien Gaumont & Martin Schindler & Randall Wright, 2006. "Equilibrium Wage Dispersion: An Example," 2006 Meeting Papers, Society for Economic Dynamics 147, Society for Economic Dynamics.
  17. 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.
  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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Cited by:
  1. 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.
  2. 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.
  3. Rupert, Peter & Wasmer, Etienne, 2009. "Housing and the Labor Market: Time to Move and Aggregate Unemployment," IZA Discussion Papers 4172, Institute for the Study of Labor (IZA).
  4. 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.

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