Commuting, Migration and Local Employment Elasticities

70 Pages Posted: 16 Nov 2015

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

Many changes in the economic environment are local, including policy changes and infrastructure investments. The effect of these changes depends crucially on the ability of factors to move in response. Therefore a key object of interest for policy evaluation and design is the elasticity of local employment to these changes in the economic environment. We develop a quantitative general equilibrium model that incorporates spatial linkages between locations in goods markets (trade) and factor markets (commuting and migration). We find substantial heterogeneity across locations in local employment elasticities. We show that this heterogeneity can be well explained with theoretically motivated measures of commuting flows. Without taking into account this dependence, estimates of the local employment elasticity for one location are not generalizable to other locations. We also find that commuting flows and their importance cannot be accounted for with standard measures of size or wages at the county or commuting zone levels.

Keywords: local impact, mobility, productivity shocks, Ricardian models, trade

JEL Classification: F10, J21, J61, R12, R23

Suggested Citation

Monte, Ferdinando and Redding, Stephen J. and Rossi-Hansberg, Esteban A., Commuting, Migration and Local Employment Elasticities (November 2015). CEPR Discussion Paper No. DP10933, Available at SSRN: https://ssrn.com/abstract=2691538

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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