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Commuting, migration and local employment elasticities

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  • Monte, Ferninando
  • Redding, Stephen J.
  • Rossi-Hansberg, Esteban

Abstract

Many changes in the economic environment are local, including policy changes and infrastructure investments. The effect of these changes depends crucially on the ability of factors to move in response. Therefore a key object of interest for policy evaluation and design is the elasticity of local employment to these changes in the economic environment. We develop a quantitative general equilibrium model that incorporates spatial linkages between locations in goods markets (trade) and factor markets (commuting and migration). We find substantial heterogeneity across locations in local employment elasticities. We show that this heterogeneity can be well explained with theoretically motivated measures of commuting flows. Without taking into account this dependence, estimates of the local employment elasticity for one location are not generalizable to other locations. We also find that commuting flows and their importance cannot be accounted for with standard measures of size or wages at the county or commuting zone levels.

Suggested Citation

  • Monte, Ferninando & Redding, Stephen J. & Rossi-Hansberg, Esteban, 2015. "Commuting, migration and local employment elasticities," LSE Research Online Documents on Economics 65006, London School of Economics and Political Science, LSE Library.
  • Handle: RePEc:ehl:lserod:65006
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    Cited by:

    1. Benjamin Faber & Cecile Gaubert, 2016. "Tourism and Economic Development: Evidence from Mexico's Coastline," NBER Working Papers 22300, National Bureau of Economic Research, Inc.
    2. Lorenzo Caliendo & Luca David Opromolla & Fernando Parro & Alessandro Sforza, 2017. "Goods and Factor Market Integration: A Quantitative Assessment of the EU Enlargement," CEP Discussion Papers dp1494, Centre for Economic Performance, LSE.
    3. repec:anr:reveco:v:9:y:2017:p:21-58 is not listed on IDEAS
    4. Behrens, Kristian & Mion, Giordano & Murata, Yasusada & Suedekum, Jens, 2017. "Spatial frictions," Journal of Urban Economics, Elsevier, vol. 97(C), pages 40-70.
    5. Owen Zidar & Juan Carlos Serrato & Eduardo Morales & Pablo Fajgelbaum, 2015. "State Taxes and Spatial Misallocation," 2015 Meeting Papers 877, Society for Economic Dynamics.
    6. Stephan Fretz & Raphaël Parchet & Frédéric Robert-Nicoud, 2017. "Highways, Market Access and Spatial Sorting," SERC Discussion Papers 0227, Spatial Economics Research Centre, LSE.
    7. Marcus Berliant & Tomoya Mori, 2017. "Beyond urban form: How Masahisa Fujita shapes us," International Journal of Economic Theory, The International Society for Economic Theory, vol. 13(1), pages 5-28, March.
    8. Nelson Lind & Natalia Ramondo, 2018. "Trade with Correlation," NBER Working Papers 24380, National Bureau of Economic Research, Inc.
    9. Brülhart, Marius & Carrère, Céline & Robert-Nicoud, Frédéric, 2015. "Trade and Towns: Heterogeneous Adjustment to a Border Shock," CEPR Discussion Papers 10886, C.E.P.R. Discussion Papers.
    10. Stephen J. Redding & Esteban Rossi-Hansberg, 2017. "Quantitative Spatial Economics," Annual Review of Economics, Annual Reviews, vol. 9(1), pages 21-58, September.
    11. Marco Di Maggio & Amir Kermani, 2016. "The Importance of Unemployment Insurance as an Automatic Stabilizer," NBER Working Papers 22625, National Bureau of Economic Research, Inc.
    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. David Jinkins & Farid Farrokhi, 2017. "Wage inequality and the Location of Cities," 2017 Meeting Papers 924, Society for Economic Dynamics.
    14. Yuan Zi, 2016. "Trade Liberalization and the Great Labor Reallocation," IHEID Working Papers 18-2016, Economics Section, The Graduate Institute of International Studies.
    15. Jan (J.) Rouwendal & Or Levkovich & Ismir Mulalic, 2017. "Discrete Choice Models for Commuting Interactions," Tinbergen Institute Discussion Papers 17-067/VIII, Tinbergen Institute.
    16. Marcel Henkel & Tobias Seidel, 2016. "A Spatial Perspective on European Integration: Heterogeneous Welfare and Migration Effects from the Single Market and the Brexit," CESifo Working Paper Series 6289, CESifo Group Munich.
    17. Michael Amior & Alan Manning, 2015. "The Persistence of Local Joblessness," CEP Discussion Papers dp1357, Centre for Economic Performance, LSE.
    18. Maximilian von Ehrlich, Tobias Seidel, 2016. "The persistent effects of place-based policy: Evidence from the West-German Zonenrandgebiet," Diskussionsschriften credresearchpaper09, Universitaet Bern, Departement Volkswirtschaft - CRED.
    19. Victor Couture & Jessie Handbury, 2017. "Urban Revival in America, 2000 to 2010," NBER Working Papers 24084, National Bureau of Economic Research, Inc.
    20. Melanie Morten & Jaqueline Oliveira, 2016. "Paving the Way to Development: Costly Migration and Labor Market Integration," NBER Working Papers 22158, National Bureau of Economic Research, Inc.
    21. 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].
    22. repec:eee:juecon:v:100:y:2017:i:c:p:80-103 is not listed on IDEAS
    23. Marta Auricchio & Emanuele Ciani & Alberto Dalmazzo & Guido de Blasio, 2017. "The consequences of public employment: evidence from Italian municipalities," Temi di discussione (Economic working papers) 1125, Bank of Italy, Economic Research and International Relations Area.

    More about this item

    Keywords

    commuting; migration and local employment elasticities;

    JEL classification:

    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • J6 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • R0 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General

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