Residential Location, Job Location, and Wages: Theory and Empirics

Rune Vejlin

Economics Working Papers from Department of Economics and Business Economics, Aarhus University

Abstract: I develop a stylized partial on-the-job equilibrium search model which incorporate a spatial dimension. Workers reside on a circle and can move at a cost. Each point on the circle has a wage distribution. Implications about wages and job mobility are drawn from the model and tested on Danish matched employer-employee data. The model predictions hold true. I find that workers working farther away from their residence earn higher wages. When a worker is making a job-to-job transition where he changes workplace location he experiences a higher wage change than a worker making a job-to-job transition without changing workplace location. However, workers making a job-to-job transition which makes the workplace location closer to the residence experiences a wage drop. Furthermore, low wage workers and workers with high transportation costs are more likely to make job-to-job transitions, but also residential moves.

Keywords: ob mobility; residential mobility; wage dynamics; search (search for similar items in EconPapers)
JEL-codes: J3 J6 R3 (search for similar items in EconPapers)
Pages: 36
Date: 2010-08-27
New Economics Papers: this item is included in nep-geo, nep-lab and nep-ure
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https://repec.econ.au.dk/repec/afn/wp/10/wp10_14.pdf (application/pdf)

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Journal Article: Residential Location, Job Location, and Wages: Theory and Empirics (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:aah:aarhec:2010-14

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