Commuting, Migration, and Local Employment Elasticities
- (pp. 3855-90)
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.20151507Additional 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