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Does Commuting Reduce Wage Disparities?

Mihails Hazans ()

Labor and Demography from EconWPA

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.

Keywords: commuting; wage disparities; earnings functions; Baltic countries (search for similar items in EconPapers)
JEL-codes: J31 J61 P52 R12 R23 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-edu, nep-geo, nep-lab and nep-ure
Date: 2005-09-29
Note: Type of Document - pdf; pages: 25
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