Working Papers, Swedish National Road & Transport Research Institute (VTI)
An empirical on-the-job search model with preferences for relative earnings: How high is the value of commuting time?
() and Jan-Erik Swärdh
Abstract: The purpose of this paper is to estimate the average value
of commuting time (VoCT) in an empirical on-the-job search model. A large
Swedish sample of employee-establishment linked data obtained from
administrative registers is used to this end. The sample contains detailed
information on the individuals' place of residence and place of work and it
is combined with information on travel times and travel distances in the
road network. We use two empirical models of the individuals' utility
function: a basic model and an augmented model. The latter introduces a set
of variables intended to capture the effect of interpersonal comparisons of
earnings and commuting times in the individual's utility function and on
the estimated VoCT. The basic model suggests the average VoCT to be as high
as 232 Swedish kronor (SEK) per hour, which is about two and half times
higher than the net hourly wage rate in the sample. If we discard the
effect of interpersonal comparisons of earnings and commuting time on job
switching, the augmented model instead suggests a value of time of 94 SEK,
which is more or less equal to the net hourly wage rate in the sample.
Keywords: Value of commuting time; Revealed preferences; Relative earnings; (follow links to similar papers)
JEL-Codes: C41; C81; J60; R41; (follow links to similar papers)
31 pages, September 20, 2007
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