Costly Commuting and the Job Ladde r
Abstract:
The interacti
on between commuting, mobility, and employment are studied in a model of se
arch on the job. When commuting is costly, the ability to move improves wor
kers’ utility. The more difficult it is to move, the more weight unemployed
workers put on commuting, leading them to reject more job offers. When fir
ms differ in productivity, high commuting costs can cause even the most pro
ductive job offers to be rejected in equilibrium. For a given wage, employe
d workers with shorter commutes accept fewer jobs through on-the-job search
, slowing their progress up the job ladder. A fall in the probability to mo
ve or rise in commuting costs will increase unemployment and decrease the s
peed at which workers climb the job ladder, leading to large earnings losse
s through slower wage growth and an endogenous fall in output. I document t
he link between commutes, job-to-job transitions, and earnings empirically.
I build a theoretical model to study how policies that increase mobility o
r subsidize commuting costs affect future wage growth.