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Residential Location, Job Location, and Wages: Theory and Empirics

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  • Rune M. Vejlin

    () (School of Economics and Management, Aarhus University, Denmark)

Abstract

I develop a stylized partial on-the-job equilibrium search model which incorporate a spatial dimension. Workers reside on a circle and can move at a cost. Each point on the circle has a wage distribution. Implications about wages and job mobility are drawn from the model and tested on Danish matched employer-employee data. The model predictions hold true. I find that workers working farther away from their residence earn higher wages. When a worker is making a job-to-job transition where he changes workplace location he experiences a higher wage change than a worker making a job-to-job transition without changing workplace location. However, workers making a job-to-job transition which makes the workplace location closer to the residence experiences a wage drop. Furthermore, low wage workers and workers with high transportation costs are more likely to make job-to-job transitions, but also residential moves.

Suggested Citation

  • Rune M. Vejlin, 2010. "Residential Location, Job Location, and Wages: Theory and Empirics," Economics Working Papers 2010-14, Department of Economics and Business Economics, Aarhus University.
  • Handle: RePEc:aah:aarhec:2010-14
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    References listed on IDEAS

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    More about this item

    Keywords

    ob mobility; residential mobility; wage dynamics; search;

    JEL classification:

    • J6 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers
    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
    • R3 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location

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