I would like to thank Maria Humlum and Michael Svarer for helpful comments and the CAP project for providing me with the data. I would also like to thank the editor, Franco Peracchi, and one anonymous referee for comments. I greatly acknowledge financial support from the Danish Social Sciences Research Council (grant No. FSE 09-066745).
Residential Location, Job Location, and Wages: Theory and Empirics
Article first published online: 28 JAN 2013
© 2013 CEIS, Fondazione Giacomo Brodolini and John Wiley & Sons Ltd
Volume 27, Issue 2, pages 115–139, June 2013
How to Cite
Vejlin, R. (2013), Residential Location, Job Location, and Wages: Theory and Empirics. LABOUR, 27: 115–139. doi: 10.1111/labr.12007
- Issue published online: 7 MAY 2013
- Article first published online: 28 JAN 2013
- Danish Social Sciences Research Council. Grant Number: FSE 09-066745
I develop a stylized partial on-the-job equilibrium search model that incorporates 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/she changes workplace location he/she 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 that makes the workplace location closer to the residence experience 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.