This website uses cookies.

By clicking the "Accept" button or continuing to browse our site, you agree to first-party and session-only cookies being stored on your device to enhance site navigation and analyze site performance and traffic. For more information on our use of cookies, please see our Privacy Policy.

  1. Home
  2. Journals
  3. American Economic Review
  4. December 2018
  5. Commuting, Migration, and Local Employment Elasticities

Commuting, Migration, and Local Employment Elasticities

  • Ferdinando Monte
  • Stephen J. Redding
  • Esteban Rossi-Hansberg
American Economic Review
vol. 108, no. 12, December 2018
(pp. 3855-90)
Download Full Text PDF

Abstract

We provide theory and evidence that the elasticity of local employment to a labor demand shock is heterogeneous depending on the commuting openness of the local labor market. We develop a quantitative general equilibrium model that incorporates spatial linkages in goods markets (trade) and factor markets (commuting and migration). We quantify this model to match the observed gravity equation relationships for trade and commuting. We find that empirically-observed reductions in commuting costs generate welfare gains of around 3.3 percent. We provide separate quasi-experimental evidence in support of the model's predictions using the location decisions of million dollar plants.

Citation

Monte, Ferdinando, Stephen J. Redding, and Esteban Rossi-Hansberg. 2018. "Commuting, Migration, and Local Employment Elasticities." American Economic Review, 108 (12): 3855-90. DOI: 10.1257/aer.20151507

Additional Materials

JEL Classification

  • J23 Labor Demand
  • J61 Geographic Labor Mobility; Immigrant Workers
  • R23 Urban, Rural, Regional, Real Estate, and Transportation Economics: Regional Migration; Regional Labor Markets; Population; Neighborhood Characteristics
  • R32 Other Spatial Production and Pricing Analysis
  • R41 Transportation: Demand, Supply, and Congestion; Travel Time; Safety and Accidents; Transportation Noise