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Commuting and Reimbursement of Residential Relocation Costs

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  • Jos Van Ommeren
  • Piet Rietveld

Abstract

We develop an equilibrium job search model in which employees incur commuting costs, and residential relocation is costly. We demonstrate that firms partially compensate workers for the incurred relocation costs to avoid paying compensation for commuting costs when house prices do not fully compensate the commuting costs. Taxing reimbursement of relocation costs at a higher rate than reimbursement of commuting costs raises the length of the average journey to work and this tax structure should therefore be avoided if one of the governments' policy objectives is to reduce the (external) costs of commuting. © 2007 LSE and the University of Bath

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  • Jos Van Ommeren & Piet Rietveld, 2007. "Commuting and Reimbursement of Residential Relocation Costs," Journal of Transport Economics and Policy, University of Bath, vol. 41(1), pages 51-73, January.
  • Handle: RePEc:tpe:jtecpo:v:41:y:2007:i:1:p:51-73
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    Cited by:

    1. Zenou, Yves, 2009. "Urban search models under high-relocation costs. Theory and application to spatial mismatch," Labour Economics, Elsevier, vol. 16(5), pages 534-546, October.
    2. Rune Vejlin, 2013. "Residential Location, Job Location, and Wages: Theory and Empirics," LABOUR, CEIS, vol. 27(2), pages 115-139, June.
    3. Gintare Morkute, 2014. "Growing surrounded by decline: do the growing sectors benefit from sharing a labour pool with declining sectors," ERSA conference papers ersa14p1584, European Regional Science Association.
    4. Zenou, Yves, 2007. "High Relocation Costs in Search-Matching Models: Theory and Application to Spatial Mismatch," IZA Discussion Papers 2739, Institute for the Study of Labor (IZA).

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