The valuation of changes in commuting distances: An analysis using georeferenced data

We analyze the causal effect of commuting on wages, using a large sample of German job changers. Information on their home and workplace addresses in combination with road navigation software allows us to calculate exact door-to-door commuting distances with an unprecedented degree of precision. We use a theoretical model on spatial job search to motivate our empirical strategy. By focusing on job moves, we can use panel data techniques and control for unobserved individual heterogeneity. We find an asymmetric valuation of distance changes. Job changers value a reduction of their commuting distance higher than an increase. Apparently, individuals are not able to capitalize the full costs of commuting in their wages. A large part of this effect can be explained by sorting into certain firms at different distances and the rest by individual wage bargaining.