Beyond Lost Earnings : The Long-Term Impact of Job Displacement on Workers’ Commuting Behavior

Job displacement results in large and persistent earnings losses, but less is known about the non-monetary costs of job losses or workers' valuation for such costs. In this paper, we identify and quantify the impact of job displacement on workers' commuting behavior. Combining German employer-employee matched data with geo-referenced data on workers' workplaces and residences, we estimate the impact of job losses due to mass layoffs on the commuting distance and commuting time of displaced workers. Conditional on finding a new job, workers' commuting distance increases by 21 percent (3 kilometers) in the first year after displacement and declines subsequently. Commuting time increases to a lesser extent because workers flexibly choose the mode of commute. Further analysis reveals that the recovery of commuting is driven by job changes rather than relocation. Male workers, workers with skills mismatched with local demands, and workers with shorter unemployment duration experience particularly large increases in commuting. The monetary value of increased commuting is identified using a job search model with heterogeneous firm productivity and commuting distances. Our structural estimates suggest that workers' average commuting cost amounts to 18--20 euros per day and women have a higher valuation for commuting than men. As such, increased commuting after job loss amounts to 20 percent of the contemporaneous wage losses. Our study sheds light on policies that facilitate job finding through commuting, such as public transportation programs, commuting subsidies, and working-from-home