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Recruitment in a Monopsonistic Labour Market: Will Travel Costs be reimbursed?

Author

Listed:
  • Jan Rouwendal

    (Vrije Universiteit Amsterdam)

  • Jos van Ommeren

    (Vrije Universiteit Amsterdam)

Abstract

Reimbursement of commuting costs by employers has attracted little attention from economists. We develop a theoretical model of a monopsonistic employer who determines an optimal recruitment policy in a spatial labour market with search frictions and show that partial reimbursement of commuting cost will in general be an element of the recruitment policy. The empirical evidence we offer is consistent with the interpretation of reimbursement as the result of monopsonistic behaviour. The alternative explanation that stresses the role of tax incentives is unlikely to provide a full explanation of the commuting costs reimbursement.

Suggested Citation

  • Jan Rouwendal & Jos van Ommeren, 2007. "Recruitment in a Monopsonistic Labour Market: Will Travel Costs be reimbursed?," Tinbergen Institute Discussion Papers 07-044/3, Tinbergen Institute, revised 03 Sep 2008.
    • Handle: RePEc:tin:wpaper:20070044
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    References listed on IDEAS

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    JEL classification:

    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods

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