Department of Economics and Business Economics

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

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  • Wp10 14

    Final published version, 194 KB, PDF document

  • School of Economics and Management
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.
Original languageEnglish
Place of publicationAarhus
PublisherInstitut for Økonomi, Aarhus Universitet
Number of pages36
Publication statusPublished - 2010

    Research areas

  • ob mobility, residential mobility, wage dynamics, search

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