Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/296070 
Year of Publication: 
2024
Series/Report no.: 
CESifo Working Paper No. 10981
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
An unappreciated potential benefit of commuting subsidies is that they can expand the choice set of feasible job opportunities in a way that facilitates a better job match quality. Variations in wages and initial commuting distances, combined with major reforms of the commuting subsidy formula in Germany, generate worker-specific variation in commuting subsidy changes. We study the effect of changes in these subsidies on a worker's position in the wage distribution. Increases in the generosity of commuting subsidies induce workers to switch to higher-paying jobs with longer commutes. Although increases in commuting subsidies generally induce workers to switch to employers that pay higher wages, commuting subsidies also enhance positive assortativity in the labor market by better matching high-ability workers to higher-productivity plants. Greater assortativity induced by commuting subsidies corresponds to greater earnings inequality.
Subjects: 
commuting
commuting subsidies
taxes
wage distribution
local labor markets
AKM
assortativity
JEL: 
H20
H31
J20
J61
R23
R48
Document Type: 
Working Paper
Appears in Collections:

Files in This Item:
File
Size





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.