Wages and commuting: quasi-natural experiments' evidence from firms that relocate

Ismir Mulalic; Jos N. van Ommeren; Ninette Pilegaard

Wages and commuting: quasi-natural experiments' evidence from firms that relocate

Ismir Mulalic, Jos N. van Ommeren, Ninette Pilegaard

Research output: Chapter in Book/Report/Conference proceeding › Article in proceedings › Research › peer-review

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Abstract

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.

Original language	English
Title of host publication	NECTAR conference 'Smart Networks - Smooth Transport - Smiling People'
Publication date	2011
Publication status	Published - 2011
Event	NECTAR conference 'Smart Networks - Smooth Transport - Smiling People' - University of Antwerp, Antwerp, Netherlands Duration: 18 May 2011 → 20 May 2011

Conference

Conference	NECTAR conference 'Smart Networks - Smooth Transport - Smiling People'
Location	University of Antwerp
Country	Netherlands
City	Antwerp
Period	18/05/2011 → 20/05/2011

Access to Document

TingbergenInstituteDiscussionPaperFinal published version, 240 KB

http://econpapers.repec.org/paper/dgruvatin/20100093.htm

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title = "Wages and commuting: quasi-natural experiments' evidence from firms that relocate",

abstract = "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{\textquoteright} 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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AU - Ommeren, Jos N. van

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N2 - 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.

AB - 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.

M3 - Article in proceedings

BT - NECTAR conference 'Smart Networks - Smooth Transport - Smiling People'

Y2 - 18 May 2011 through 20 May 2011

ER -