Recruitment in a Monopsonistic Labour Market: Will Travel Costs Be Reimbursed?

Tinbergen Institute Discussion Paper No. 07-044/3

31 Pages Posted: 13 Jun 2007

See all articles by Jan Rouwendal

Jan Rouwendal

VU University Amsterdam - Department of Spatial Economics; Tinbergen Institute

Jos van Ommeren

Vrije Universiteit Brussel (VUB)

Date Written: June 2007

Abstract

Reimbursement of commuting costs by employers has attracted little attention from economists. We develop a theoretical model of a monopsonistic employer who determines an optimal recruitment policy in a spatial labour market with search frictions and show that partial reimbursement of commuting cost will in general be an element of the recruitment policy. The empirical evidence we offer is consistent with the interpretation of reimbursement as the result of monopsonistic behaviour. The alternative explanation that stresses the role of tax incentives is unlikely to provide a full explanation of the commuting costs reimbursement.

Keywords: monopsonistic labour markets, commuting, spatial labour market analysis

JEL Classification: J33

Suggested Citation

Rouwendal, Jan and van Ommeren, Jos, Recruitment in a Monopsonistic Labour Market: Will Travel Costs Be Reimbursed? (June 2007). Tinbergen Institute Discussion Paper No. 07-044/3, Available at SSRN: https://ssrn.com/abstract=992812 or http://dx.doi.org/10.2139/ssrn.992812

Jan Rouwendal (Contact Author)

VU University Amsterdam - Department of Spatial Economics ( email )

De Boelelaan 1105
1081HV Amsterdam
Netherlands

Tinbergen Institute ( email )

Burg. Oudlaan 50
Rotterdam, 3062 PA
Netherlands

Jos Van Ommeren

Vrije Universiteit Brussel (VUB) ( email )

Pleinlaan 2
http://www.vub.ac.be/
Brussels, 1050
Belgium

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