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Does Commuting Reduce Wage Disparities?

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Author Info
Mihails Hazans (University of Latvia & BICEPS)

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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 other. 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.

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Publisher Info
Paper provided by EconWPA in its series Labor and Demography with number 0509012.

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Length: 25 pages
Date of creation: 29 Sep 2005
Date of revision:
Handle: RePEc:wpa:wuwpla:0509012

Note: Type of Document - pdf; pages: 25
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Web page: http://129.3.20.41

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Related research
Keywords: commuting; wage disparities; earnings functions; Baltic countries;

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Find related papers by JEL classification:
J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
J61 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Geographic Labor Mobility; Immigrant Workers
P52 - Economic Systems - - Comparative Economic Systems - - - Comparative Studies of Particular Economies
R12 - Urban, Rural, and Regional Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
R23 - Urban, Rural, and Regional Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population

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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.:
  1. Brueckner, Jan K. & Martin, Richard W., 1997. "Spatial mismatch: An equilibrium analysis," Regional Science and Urban Economics, Elsevier, vol. 27(6), pages 693-714, November. [Downloadable!] (restricted)
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  5. Wrede, Matthias, 2001. "Should Commuting Expenses Be Tax Deductible? A Welfare Analysis," Journal of Urban Economics, Elsevier, vol. 49(1), pages 80-99, January. [Downloadable!] (restricted)
  6. Wasmer, Etienne & Zenou, Yves, 1999. "Does Space Affect Search? A Theory of Local Unemployment," CEPR Discussion Papers 2157, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  7. Zenou, Yves, 1999. "Urban Unemployment, Agglomeration and Transportation Policies," CEPR Discussion Papers 2309, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  8. Daniel McFadden & Kenneth Train, 2000. "Mixed MNL models for discrete response," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 15(5), pages 447-470. [Downloadable!]
  9. 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. [Downloadable!] (restricted)
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  11. Jan K. Brueckner & Jacques-FranÁois Thisse & Yves Zenou, 2002. "Local Labor Markets, Job Matching, and Urban Location," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 43(1), pages 155-171, February. [Downloadable!] (restricted)
    Other versions:
  12. Mihails Hazans, 2003. "Determinants of Inter-Regional Migration in the Baltic Countries," ERSA conference papers ersa03p354, European Regional Science Association. [Downloadable!]
  13. Richard Arnott, 1997. "Economic Theory and the Spatial Mismatch Hypothesis," Boston College Working Papers in Economics 390., Boston College Department of Economics. [Downloadable!]
  14. So, Kim S & Orazem, Peter F & Otto, Daniel M, 2001. " The Effects of Housing Prices, Wages, and Commuting Time on Joint Residential and Job Location Choices," American Journal of Agricultural Economics, American Agricultural Economics Association, vol. 83(4), pages 1036-48, November. [Downloadable!] (restricted)
    Other versions:
  15. Zax, Jeffrey S., 1991. "Compensation for commutes in labor and housing markets," Journal of Urban Economics, Elsevier, vol. 30(2), pages 192-207, September. [Downloadable!] (restricted)
  16. Puhani, Patrick A, 2000. " The Heckman Correction for Sample Selection and Its Critique," Journal of Economic Surveys, Blackwell Publishing, vol. 14(1), pages 53-68, February. [Downloadable!] (restricted)
  17. Webster, David, 2000. "The Geographical Concentration of Labour-Market Disadvantage," Oxford Review of Economic Policy, Oxford University Press, vol. 16(1), pages 114-28, Spring.
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