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Wages and Commuting: Quasi‐natural Experiments' Evidence from Firms that Relocate

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  • Ismir Mulalic
  • Jos N. Van Ommeren
  • Ninette Pilegaard

Abstract

This discussion paper resulted in a publication in the 'Economic Journal' , 2014, 124(579), 1086-1105. We examine the causal effect of commuting distance on workers' wages in a quasi-natural experiments setting using information on all workers in Denmark. We account for endogeneity of distance by using changes in distance that are due to firms' relocations. For the range of commuting distances where income tax reductions associated with commuting do not apply, one kilometre increase in commuting distance induces a wage increase of about 0.42%, suggesting an hourly compensation of about half of the hourly net wage. Our findings are consistent with wage bargaining theory and suggest a bargaining power parameter of about 0.50. Due to the experimental setup we are able to exclude many competing explanations of the wage-distance relationship.
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Suggested Citation

  • Ismir Mulalic & Jos N. Van Ommeren & Ninette Pilegaard, 2014. "Wages and Commuting: Quasi‐natural Experiments' Evidence from Firms that Relocate," Economic Journal, Royal Economic Society, vol. 124(579), pages 1086-1105, September.
  • Handle: RePEc:wly:econjl:v:124:y:2014:i:579:p:1086-1105
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    File URL: http://hdl.handle.net/10.1111/ecoj.2014.124.issue-579
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    References listed on IDEAS

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    1. Zenou,Yves, 2009. "Urban Labor Economics," Cambridge Books, Cambridge University Press, number 9780521698221, August.
    2. Pierre Cahuc & Fabien Postel-Vinay & Jean-Marc Robin, 2006. "Wage Bargaining with On-the-Job Search: Theory and Evidence," Econometrica, Econometric Society, vol. 74(2), pages 323-364, March.
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    Cited by:

    1. repec:eee:regeco:v:69:y:2018:i:c:p:25-37 is not listed on IDEAS
    2. Fetene, Gebeyehu M. & Hirte, Georg & Kaplan, Sigal & Prato, Carlo G. & Tscharaktschiew, Stefan, 2016. "The economics of workplace charging," Transportation Research Part B: Methodological, Elsevier, vol. 88(C), pages 93-118.
    3. Munford, L.; & Rice, N.; & Roberts, J.; & Jacob, N.;, 2018. "The disutility of commuting? The effect of gender and local labour markets," Health, Econometrics and Data Group (HEDG) Working Papers 18/14, HEDG, c/o Department of Economics, University of York.
    4. Paul Cheshire & Christian A. L. Hilber & Hans R. A. Koster, 2015. "Regulating Housing Vacancies Away? The Paradoxical Effects of Mismatch," SERC Discussion Papers 0181, Spatial Economics Research Centre, LSE.
    5. Francesca Carta & Marta De Philippis, 2015. "You've come a long way, baby. Effects of commuting times on couples' labour supply," Temi di discussione (Economic working papers) 1003, Bank of Italy, Economic Research and International Relations Area.
    6. Sergii TROSHCHENKOV, 2016. "Return to Commuting Distance in Sweden," Departmental Working Papers 2016-08, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano.
    7. repec:oup:oxecpp:v:69:y:2017:i:3:p:734-757. is not listed on IDEAS
    8. Carree, Martin & Kronenberg, Kristin, 2012. "Locational choices and the costs of distance: empirical evidence for Dutch graduates," MPRA Paper 36221, University Library of Munich, Germany.
    9. Jennifer Roberts & Karl Taylor, 2017. "Intra-household commuting choices and local labour markets," Oxford Economic Papers, Oxford University Press, vol. 69(3), pages 734-757.
    10. Paul Cheshire & Christian Hilber & Hans Koster, 2015. "Regulating vacancies away? The paradoxical effects of mismatch in the housing market," ERSA conference papers ersa15p1524, European Regional Science Association.
    11. 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.
    12. Heuermann, Daniel F. & Assmann, Franziska & vom Berge, Philipp & Freund, Florian, 2017. "The distributional effect of commuting subsidies - Evidence from geo-referenced data and a large-scale policy reform," Regional Science and Urban Economics, Elsevier, vol. 67(C), pages 11-24.
    13. Reichelt, Malte & Haas, Anette, 2015. "Commuting farther and earning more? : how employment density moderates workers commuting distance," IAB Discussion Paper 201533, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    14. repec:bla:jregsc:v:57:y:2017:i:4:p:631-654 is not listed on IDEAS
    15. MORIKAWA Masayuki, 2018. "Long Commuting Time and the Benefits of Telecommuting," Discussion papers 18025, Research Institute of Economy, Trade and Industry (RIETI).
    16. J. Meekes & W.H.J. Hassink, 2016. "The role of the housing market in workers’ resilience to job displacement after firm bankruptcy," Working Papers 16-10, Utrecht School of Economics.
    17. Lehmann, Etienne & Montero Ledezma, Paola L. & Linden, Bruno Van der, 2016. "Workforce location and equilibrium unemployment in a duocentric economy with matching frictions," Journal of Urban Economics, Elsevier, vol. 91(C), pages 26-44.
    18. repec:eee:pubeco:v:158:y:2018:i:c:p:126-151 is not listed on IDEAS
    19. Dauth, Wolfgang & Haller, Peter, 2016. "The valuation of changes in commuting distances: an analysis using georeferenced data," IAB Discussion Paper 201643, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    20. Giovanis, Eleftherios, 2015. "Do the Flexible Employment Arrangements Increase Job Satisfaction and the Loyalty of the Employees? An Evidence from Great Britain," MPRA Paper 68669, University Library of Munich, Germany.
    21. Martijn Smit, 2017. "Following Your Job," Papers in Evolutionary Economic Geography (PEEG) 1718, Utrecht University, Department of Human Geography and Spatial Planning, Group Economic Geography, revised Jul 2017.
    22. Rosa Sanchis-Guarner, 2012. "Driving Up Wages: The Effects of Road Construction in Great Britain," SERC Discussion Papers 0120, Spatial Economics Research Centre, LSE.
    23. Meekes, Jordy & Hassink, Wolter, 2017. "The Role of the Housing Market in Workers' Resilience to Job Displacement after Firm Bankruptcy," IZA Discussion Papers 10894, Institute for the Study of Labor (IZA).
    24. Kobus, Martijn B.W. & Van Ommeren, Jos N. & Rietveld, Piet, 2015. "Student commute time, university presence and academic achievement," Regional Science and Urban Economics, Elsevier, vol. 52(C), pages 129-140.

    More about this item

    JEL classification:

    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • R41 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Transportation: Demand, Supply, and Congestion; Travel Time; Safety and Accidents; Transportation Noise

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