Commuting, Migration and Local Employment Elasticities

42 Pages Posted: 9 Nov 2015 Last revised: 24 Apr 2022

See all articles by Ferdinando Monte

Ferdinando Monte

Georgetown University - McDonough School of Business

Stephen J. Redding

Princeton University

Esteban Rossi-Hansberg

University of Chicago - Department of Economics; National Bureau of Economic Research (NBER)

Multiple version iconThere are 2 versions of this paper

Date Written: November 2015

Abstract

To understand the elasticity of employment to local labor demand shocks, we develop a quantitative general equilibrium model that incorporates spatial linkages in goods markets (trade) and factor markets (commuting and migration). We show that local employment elasticities differ substantially across U.S. counties and commuting zones in ways that are not well explained by standard empirical controls but are captured by commuting measures. We provide independent evidence for these predictions from million dollar plants and find that empirically-observed reductions in commuting costs generate welfare gains of around 3.3 percent and employment reallocations from -20 to 30 percent.

Suggested Citation

Monte, Ferdinando and Redding, Stephen J. and Rossi-Hansberg, Esteban A., Commuting, Migration and Local Employment Elasticities (November 2015). NBER Working Paper No. w21706, Available at SSRN: https://ssrn.com/abstract=2687855

Ferdinando Monte (Contact Author)

Georgetown University - McDonough School of Business ( email )

3700 O Street, NW
Washington, DC 20057
United States

Stephen J. Redding

Princeton University ( email )

Princeton, NJ 08544-1021
United States

HOME PAGE: http://www.princeton.edu/~reddings/

Esteban A. Rossi-Hansberg

University of Chicago - Department of Economics

1126 East 59th Street
Chicago, IL 60637
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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