Scandinavian Working Papers in Economics

Working Paper Series,
Research Institute of Industrial Economics

No 627: Shirking, Commuting and Labor Market Outcomes

Stephen L. Ross and Yves Zenou ()
Additional contact information
Stephen L. Ross: University of Connecticut, Postal: Department of Economics, 341 Mansfield Road U-63, Storrs, CT 06269, USA
Yves Zenou: The Research Institute of Industrial Economics, Postal: P.O. Box 55665, SE-102 15 Stockholm, Sweden

Abstract: Recent theoretical work has examined the spatial distribution of unemployment using the efficiency wage model as the mechanism by which unemployment arises in the urban economy. This paper extends the standard efficiency wage model in order to allow for behavioral substitution between leisure time at home and effort at work. In equilibrium, residing at a location with a long commute affects the time available for leisure at home and therefore affects the trade-off between effort at work and risk of unemployment. This model implies an empirical relationship between expected commutes and labor market outcomes, which is tested using the metropolitan sample of the American Housing Survey. The empirical results suggest that shirking and leisure are complementary with the marginal benefit of shirking increasing with an individual's net time endowment.

Keywords: Efficiency Wage; Leisure; Urban Unemployment; American Housing Survey

JEL-codes: J41; R14

43 pages, August 13, 2004

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