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Substitution between working at home and out-of-home: The role of ICT and commuting costs

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  • de Graaff, Thomas
  • Rietveld, Piet

Abstract

This paper analyzes the trade-off between working at home and out-of-home, ICT and commuting time. To this end, we develop a microeconomic demand system, which explicitly incorporates both time and income constraints. Commuting time is considered as the price to be paid for working out-of-home and a decrease in earnings as the price for working at home. For the latter, we find that working at home leads to a (marginally significant) reduction of the wage rate of about 19%, but this gap largely disappears when ICT is used for at home work. To examine the relation between out-of-home and at home work empirically, we estimate a translog indirect utility function, from which we are able to estimate substitution and price elasticities between working at home and out-of-home for The Netherlands. The results show that changes in ICT and commuting time display rather weak substitution effects on working out-of-home and at home, respectively. Moreover, individual characteristics - especially age and education - seem to be more important for the choice between working at home and out-of-home than ICT availability or commuting time.

Suggested Citation

  • de Graaff, Thomas & Rietveld, Piet, 2007. "Substitution between working at home and out-of-home: The role of ICT and commuting costs," Transportation Research Part A: Policy and Practice, Elsevier, vol. 41(2), pages 142-160, February.
    • Handle: RePEc:eee:transa:v:41:y:2007:i:2:p:142-160
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