Compensation for commutes in labor and housing markets

Abstract

This paper estimates the effects of commuting time and housing characteristics on earnings of white male, white female, and black female employees of a single company. Within all three groups, earnings increase directly with commuting time. However, these increases are significantly smaller for employees commuting from census tracts with housing characteristics indicative of lower prices for housing services. Earnings premia for commuting time, net of the interactions between commuting time and housing characteristics are positive for almost all white males. However, they are negative for many white females and most black females. If locational constraints imposed by primary workers or residential segregation restrict the residential mobility of female employees, the employer may have monopsony power. That power may enable the employer to capture the housing market benefits of longer commutes for females.