Commuting, Migration, and Local Employment Elasticities

Ferdinando Monte, Stephen Redding and Esteban Rossi-Hansberg

American Economic Review, 2018, vol. 108, issue 12, 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.

JEL-codes: J23 J61 R23 R32 R41 (search for similar items in EconPapers)
Date: 2018
Note: DOI: 10.1257/aer.20151507
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Citations: View citations in EconPapers (176)

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Related works:
Working Paper: Commuting, Migration and Local Employment Elasticities (2017)
Working Paper: Commuting, Migration and Local Employment Elasticities (2015)
Working Paper: Commuting, Migration and Local Employment Elasticities (2015)
Working Paper: Commuting, migration and local employment elasticities (2015)
Working Paper: Commuting, Migration and Local Employment Elasticities (2015)
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