Commute Time and Labor Supply

53 Pages Posted: 7 May 2018 Last revised: 16 Jun 2018

See all articles by Sumit Agarwal

Sumit Agarwal

National University of Singapore

Elvira Sojli

UNSW Australia Business School, School of Banking and Finance

Wing Wah Tham

University of New South Wales (UNSW)

Date Written: June 7, 2018

Abstract

Commuting imposes financial, time and emotional cost on the labor force, which increases the cost of supplying labor. Theory suggests a negative or no relation between travel and working time for two reasons: travel time is a cost to supplying labor and commuting frustrates the traveler decreasing productivity. We use a unique dataset that records all commuting trips by public transport (bus and train) over three months in 2013 to study if commuting time affects labor supply decisions in Singapore. We propose a new measure of commuting and working time based on administrative data, which sidesteps issues related to survey data. We document a causal positive relation between commute time and the labor supply decision within individuals. Specifically, we show that a one standard deviation increase in commute time increases working time by 2.6%, controlling for individual, location, and time fixed effects.

There are two sources of variation in the elasticity of work time to travel time: across individual and within individual (time variation). While part of the cross-sectional variation may be captured by survey data, the time-variation is completely unexplored. First, we find that the cross-sectional variation depends on whether one engages in a service or manufacturing type of job. This cross-sectional variation might be missed out in survey-based responses due to a different selection process, based say on the proportion of industries in the S&P500. Second, we find that there is very large within individual variation in the elasticity, not based on calendar effects, like day of the week or month.

We investigate several potential explanations for this result. We find that in professions where interaction with co-workers and with customers is necessary, i.e. service jobs, disruptions in travelling to work cause a backlog and increase the working hours beyond the original travel delay. These (travel delayed) individuals are not compensated for the time that they put in, in addition to the usual number of working hours. This means that there is a cost shift from employer to employee. Given the recent trend of moving from manufacturing to service-based economies, it is most likely the positive elasticity will increase and become a larger economic burden.

Keywords: Commute time, labor supply, elasticity, task juggling, trains, buses, big data

JEL Classification: D1, J22, J24, M54

Suggested Citation

Agarwal, Sumit and Sojli, Elvira and Tham, Wing Wah, Commute Time and Labor Supply (June 7, 2018). Available at SSRN: https://ssrn.com/abstract=3171271 or http://dx.doi.org/10.2139/ssrn.3171271

Sumit Agarwal

National University of Singapore ( email )

15 Kent Ridge Drive
Singapore, 117592
Singapore
8118 9025 (Phone)

HOME PAGE: http://www.ushakrisna.com

Elvira Sojli (Contact Author)

UNSW Australia Business School, School of Banking and Finance ( email )

Sydney, NSW 2052
Australia

Wing Wah Tham

University of New South Wales (UNSW) ( email )

Kensington
High St
Sydney, NSW 2052
Australia

Register to save articles to
your library

Register

Paper statistics

Downloads
27
Abstract Views
271
PlumX Metrics