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

Ismir Mulalic, Jos N. van Ommeren, Ninette Pilegaard

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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 languageEnglish
    Title of host publicationNECTAR conference 'Smart Networks - Smooth Transport - Smiling People'
    Publication date2011
    Publication statusPublished - 2011
    EventNECTAR conference 'Smart Networks - Smooth Transport - Smiling People' - University of Antwerp, Antwerp, Netherlands
    Duration: 18 May 201120 May 2011

    Conference

    ConferenceNECTAR conference 'Smart Networks - Smooth Transport - Smiling People'
    LocationUniversity of Antwerp
    CountryNetherlands
    CityAntwerp
    Period18/05/201120/05/2011

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