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Handbook of Regional Science pp 75–91Cite as

Commuting, Housing, and Labor Markets

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Abstract

In the monocentric model, commuting is viewed as a burden whose cost shapes the spatial structure of cities to a considerable extent. This view has been challenged by the finding that actual commuting patterns are far from efficient. However, this “wasteful” commuting is better interpreted as an indication of labor market frictions that are traded off against commuting frictions than as a neglect of commuting costs. Urban sprawl results from the decreasing importance of physical space that was the consequence of the automobile and is fundamentally consistent with the basic insights of the monocentric model. Large and diversified urban labor markets flourish when space restrictions are relaxed because this facilitates the matching of jobs and workers along other dimensions. Having a large mortgage puts more stress on this allocation mechanism.

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Author information

Authors and Affiliations

  1. Department of Spatial Economics, VU University, De Boelelaan 1105, Amsterdam, The Netherlands

    Dr. Jan Rouwendal

Authors
  1. Dr. Jan Rouwendal
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Correspondence to Jan Rouwendal .

Editor information

Editors and Affiliations

  1. Institute for Economic Geography and GIScience, Vienna University of Economics and Business, Vienna, Austria

    Manfred M. Fischer

  2. and Business Administration Department of Spatial Economics, Free University Faculty of Economics, Amsterdam, The Netherlands

    Peter Nijkamp

Appendix Computation of the Reservation Wage

Appendix Computation of the Reservation Wage

To see how the equilibrium can be found, start with the simple situation in which there is only one employment center (N=1). When the wage offered there is high enough to let the net income at the searcher’s residential location exceed the unemployment benefit, the reservation wage will be lower than the net wage offered, and the searcher will always accept a job offer. When there are two or more employment centers, the optimal acceptance set can be determined by the following simple procedure: determine the subset of employment centers whose job offers imply a net wage at x that is at least equal to the unemployment benefit. If it is nonempty, start with an acceptance set that contains only the employment center that offers the highest net wage at x and compute a preliminary reservation wage from the above equation using this acceptance set. Compare this reservation wage with the highest net wage offered by a center that is not yet in the acceptance set. If this wage is higher than the preliminary reservation wage, add this center to the acceptance set. Recompute the reservation wage and repeat this procedure until no employment center fulfills the entrance condition or no employment centers with a net wage at x exceeding the unemployment benefit is left.

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© 2014 Springer-Verlag Berlin Heidelberg

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Rouwendal, J. (2014). Commuting, Housing, and Labor Markets. In: Fischer, M., Nijkamp, P. (eds) Handbook of Regional Science. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-23430-9_11

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  • DOI: https://doi.org/10.1007/978-3-642-23430-9_11

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  • Publisher Name: Springer, Berlin, Heidelberg

  • Print ISBN: 978-3-642-23429-3

  • Online ISBN: 978-3-642-23430-9

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