Advanced Search
MyIDEAS: Login to save this paper or follow this series

Commuting and Migration Decisions under Cost Uncertainty

Contents:

Author Info

  • Christian Schmidt

    ()

Registered author(s):

    Abstract

    In recent decades, many countries have experienced suburbanization processes in metropolitan areas that have lead to an increase in urban sprawl by creating a growing polarity between newly formed satellite communities and the central urban area. More than before, work and residence location diverged. In this context, commuting and migration are two fundamental ways of connecting an individual's place of work with his residence. These distinctive mobility modes represent temporary and permanent mobility, respectively. Deciding for any of the two incurs peculiar costs. Commuting requires recurring costs that the individual has to bear without permanently changing his residence. In contrast, migration relocates the place of residence and can therefore prevent periodical mobility costs. Due to this fact, migration can serve as an alternative to commuting in respect to connecting the place of residence with the work place. This paper represents work in progress on the individual decision between commuting and migrating to the place of work in face of uncertain commuting costs. Solutions for two initial states are derived on the basis of the real options theory. The threshold commuting cost levels at which it is optimal for the individual to relocate to the suburb when initially living in the metropolitan center and to relocate to the city center when initially living in the suburb are presented and compared to the classical net present value solution without uncertainty about commuting costs. The effect of uncertainty about the evolution of commuting costs on the optimal decision denotes a remarkable result of this model: higher uncertainty lowers the commuting cost threshold for outmigration to the suburb, while increasing it for inmigration to the city center. On the one hand, individuals initially not commuting but living in the city center deter a possible outmigration even under increasingly unfavorable rental cost conditions. On the other hand, individuals initially living in the suburb are willing to bear significantly higher commuting costs before eventually relocating to the metropolitan center.

    Download Info

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
    File URL: http://www-sre.wu.ac.at/ersa/ersaconfs/ersa10/ERSA2010finalpaper1481.pdf
    Download Restriction: no

    Bibliographic Info

    Paper provided by European Regional Science Association in its series ERSA conference papers with number ersa10p1481.

    as in new window
    Length:
    Date of creation: Sep 2011
    Date of revision:
    Handle: RePEc:wiw:wiwrsa:ersa10p1481

    Contact details of provider:
    Postal: Welthandelsplatz 1, 1020 Vienna, Austria
    Web page: http://www.ersa.org

    Related research

    Keywords:

    This paper has been announced in the following NEP Reports:

    References

    References listed on IDEAS
    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
    as in new window
    1. M. C. Burda, 1995. "Migration and the Option Value of Waiting," SFB 373 Discussion Papers 1995,58, Humboldt University of Berlin, Interdisciplinary Research Project 373: Quantification and Simulation of Economic Processes.
    2. Simpson, Wayne, 1980. "A simultaneous model of workplace and residential location incorporating job search," Journal of Urban Economics, Elsevier, vol. 8(3), pages 330-349, November.
    3. Dixit, Avinash K, 1989. "Entry and Exit Decisions under Uncertainty," Journal of Political Economy, University of Chicago Press, vol. 97(3), pages 620-38, June.
    4. Sergio Vergalli, 2006. "The Role of Community in Migration Dynamics," Working Papers 2006.4, Fondazione Eni Enrico Mattei.
    5. M. Moretto & Sergio Vergalli, 2008. "Migration dynamics," Journal of Economics, Springer, vol. 93(3), pages 223-265, 04.
    6. repec:wop:humbsf:1995-58 is not listed on IDEAS
    7. van Ommeren, Jos & Rietveld, Piet & Nijkamp, Peter, 1997. "Commuting: In Search of Jobs and Residences," Journal of Urban Economics, Elsevier, vol. 42(3), pages 402-421, November.
    8. Jacques Poot, 2007. "Demographic Change and Regional Competitiveness: The Effects of Immigration and Ageing," Population Studies Centre Discussion Papers dp-64, University of Waikato, Population Studies Centre.
    9. Kent Eliasson & Urban Lindgren & Olle Westerlund, 2003. "Geographical Labour Mobility: Migration or Commuting?," Regional Studies, Taylor & Francis Journals, vol. 37(8), pages 827-837.
    10. Mahmudul Anam & Shin-Hwan Chiang & Lieng Hua, 2008. "Uncertainty and International Migration: An Option Cum Portfolio Model," Journal of Labor Research, Springer, vol. 29(3), pages 236-250, September.
    Full references (including those not matched with items on IDEAS)

    Citations

    Lists

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    Statistics

    Access and download statistics

    Corrections

    When requesting a correction, please mention this item's handle: RePEc:wiw:wiwrsa:ersa10p1481. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Gunther Maier).

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.