Loss aversion in the trade-off between wages and commuting distances

Wolfgang Dauth and Peter Haller

VfS Annual Conference 2019 (Leipzig): 30 Years after the Fall of the Berlin Wall - Democracy and Market Economy from Verein für Socialpolitik / German Economic Association

Abstract: We exploit administrative data on exact commuting distances for a large sample of German employees and study the relation of commuting and wages. We find that it requires 1.5 times as much money in terms of higher wages for job changers to accept an increase of their commute as compared to their willingness to pay for a reduction by the same distance. This provides non-experimental evidence for loss aversion. One third of this can be attributed to sorting of workers into certain firms at various distances and the remainder to a match-specific wage component that workers and firms bargain over.

Keywords: commuting; loss aversion; marginal willingness to pay; job search (search for similar items in EconPapers)
JEL-codes: D90 J31 J64 R12 R40 (search for similar items in EconPapers)
Date: 2019
New Economics Papers: this item is included in nep-geo, nep-upt and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:zbw:vfsc19:203611

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