Hard Traveling: Commuting Costs and Urban Unemployment with Deficient Labor Demand

To alleviate urban unemployment, the urban labor literature advocates facilitating labor flow from residential neighborhoods to commercial centers. This supply-side solution reflects the literature's pervasive assumption of robust labor demand. There are many contexts, however, particularly in the developing world, where labor demand is deficient. Local improvements to connectivity, we argue, will then struggle to stimulate employment. Conversely, local adverse shocks to connectivity will not exacerbate unemployment, since the preexisting stock of unemployed laborers will absorb the shocks distributionally. We demonstrate this latter claim with geospatial data from the West Bank, where the overall political milieu plausibly inhibits labor demand. We find the deployment of Israeli army checkpoints and roadblocks obstructed peri-urban Palestinian commuters from accessing commercial centers, causing employment losses that were offset by employment gains among their more centrally located competitors. The finding casts doubt on the efficacy of connectivity initiatives to mitigate urban unemployment absent concomitant efforts to unshackle demand.