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Does Commuting Reduce Wage Disparities?

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  • Mihails Hazans

    (University of Latvia & BICEPS)

Abstract

This paper shows that in the Baltic countries, commuting reduces urban- rural wage and employment disparities and increases national output. To quantify the effect of commuting on wage differentials, two sets of earnings functions are estimated (based on Estonian, Latvian, and Lithuanian Labor Force Surveys) with location variables (capital city, rural, etc.) measured at the workplace and at the place of residence. We find that the ceteris paribus wage gap between capital city and rural areas, as well as between capital and other cities is significantly narrowed by commuting in some cases but remains almost unchanged in other. Different outcomes are explained by country-specific spatial patterns of commuting, educational and occupational composition of commuting flows, and presence or absence of wage discrimination against rural residents in urban markets. A treatment effects model is used to estimate individual wage gains to rural—urban or inter-city commuting; these gains are substantial in most but not all cases. Wage effects of commuting distance, as well as impact of education, gender, ethnicity, and local labor market conditions on the commuting decision are also explored.

Suggested Citation

  • Mihails Hazans, 2005. "Does Commuting Reduce Wage Disparities?," Labor and Demography 0509012, University Library of Munich, Germany.
    • Handle: RePEc:wpa:wuwpla:0509012
    Note: Type of Document - pdf; pages: 25
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    Cited by:

    1. Maye Ehab, 2018. "The Commuting Gender Gap and Females’ Participation and Earnings in the Egyptian Labor Market," Working Papers 1211, Economic Research Forum, revised 21 Jun 2018.
    2. Martín-Barroso, David & Núñez-Serrano, Juan A. & Turrión, Jaime & Velázquez, Francisco J., 2022. "Are workers' commutes sensitive to changes in the labour market situation?," Journal of Transport Geography, Elsevier, vol. 101(C).
    3. Leck, Eran & Bekhor, Shlomo & Gat, Daniel, 2008. "Equity Impacts of Transportation Improvements On Core and Peripheral Cities," The Journal of Transport and Land Use, Center for Transportation Studies, University of Minnesota, vol. 1(2), pages 153-182.
    4. Thorsen, Helge Sandvig & Thorsen, Inge, 2017. "Effects of transportation barriers on geographic asymmetries in labour markets," Research in Transportation Economics, Elsevier, vol. 63(C), pages 27-37.
    5. Xin Meng & Chris Manning & Li Shi & Tadjuddin Nur Effendi (ed.), 2010. "The Great Migration," Books, Edward Elgar Publishing, number 13619.
    6. Budy P. Resosudarmo & Asep Suryahadi & Raden Purnagunawan & Athia Yumna & Asri Yusrina, 2009. "The Socioeconomic and Health Status of Rural–Urban Migrants in Indonesia," Development Economics Working Papers 23042, East Asian Bureau of Economic Research.
    7. repec:dgr:uvatin:20110114 is not listed on IDEAS
    8. Badura, Ondřej & Melecký, Aleš & Melecký, Martin, 2023. "Liberalizing passenger rail: The effect of competition on local unemployment," Economics of Transportation, Elsevier, vol. 36(C).
    9. Sandow, Erika & Westin, Kerstin, 2010. "The persevering commuter - Duration of long-distance commuting," Transportation Research Part A: Policy and Practice, Elsevier, vol. 44(6), pages 433-445, July.
    10. Jiajia Wei & Qiyan Wang & Wang Gao, 2022. "How Commuting Time Affects Employees’ Income in China’s Urbanization Process," Sustainability, MDPI, vol. 14(23), pages 1-18, November.
    11. Jacob, Nikita & Munford, Luke & Rice, Nigel & Roberts, Jennifer, 2019. "The disutility of commuting? The effect of gender and local labor markets," Regional Science and Urban Economics, Elsevier, vol. 77(C), pages 264-275.
    12. Sergii TROSHCHENKOV, 2016. "Return to Commuting Distance in Sweden," Departmental Working Papers 2016-08, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano.
    13. Ieva Brauksa & Ludmila Fadejeva, 2013. "Internal Labour Market Mobility in 2005-2011: The Case of Latvia," Working Papers 2013/02, Latvijas Banka.
    14. Natalia Presman & Arie Arnon, 2006. "Commuting patterns in Israel 1991-2004," Bank of Israel Working Papers 2006.04, Bank of Israel.
    15. Hazans, Mihails & Holmen, Rasmus Bøgh & Upenieks, Jānis & Žabko, Oksana, 2024. "Regional inequalities in access to STEM-oriented secondary education in Latvia," MPRA Paper 120646, University Library of Munich, Germany.
    16. Giovanni Russo & Federico Tedeschi & Aura Reggiani & Peter Nijkamp, 2014. "Commuter Effects on Local Labour Markets: A German Modelling Study," Urban Studies, Urban Studies Journal Limited, vol. 51(3), pages 493-508, February.
    17. Ray Sales Gomes Santos & Luís Abel Silva Filho, 2024. "Pendular Mobility and Income Differentials in Formal Work in Ceara, Brazil," The Indian Journal of Labour Economics, Springer;The Indian Society of Labour Economics (ISLE), vol. 67(1), pages 1-28, March.
    18. Norbert Szabó & Richárd Farkas & Attila Varga, 2021. "The economic effects of passenger transport infrastructure investments in lagging regions. Would the increase in commuting be beneficial for regional development?," Growth and Change, Wiley Blackwell, vol. 52(4), pages 2099-2123, December.
    19. Mihails Hazans, 2003. "Returns to Education in the Baltic Countries," SSE Riga/BICEPS Research Papers 2003-1, Baltic International Centre for Economic Policy Studies (BICEPS);Stockholm School of Economics in Riga (SSE Riga).
    20. Natalia Presman & Arie Arnon, 2000. "Commuting Patterns in Israel," Regional and Urban Modeling 283600076, EcoMod.
    21. Hazans, Mihails, 2005. "Unemployment and the earnings structure in Latvia," Policy Research Working Paper Series 3504, The World Bank.

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    More about this item

    Keywords

    commuting; wage disparities; earnings functions; Baltic countries;
    All these keywords.

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • P52 - Political Economy and Comparative Economic Systems - - Comparative Economic Systems - - - Comparative Studies of Particular Economies
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population

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