Commute Costs and Labor Supply: Evidence from a Satellite Campus

Fu, Shihe and Viard, Brian (2014): Commute Costs and Labor Supply: Evidence from a Satellite Campus.

Abstract

Whether, and how much, increased commute costs decrease labor supply is important for transport policy, city growth, and business strategies. Yet empirical estimates are limited and biased downward due to endogenous choices of residences, workplaces, commute modes, and wages. We use the transition of undergraduate teaching from a Chinese university’s urban to suburban campus and ten years of complete course schedule data to test how teachers’ labor supply responds to a longer commute. Exogeneity is ensured because few faculty change residences, nearly all faculty use a free shuttle service, and we control for wage changes. Comparing before and after, the 1.0 to 1.5-hour (40-kilometer) increase in round-trip commute time reduces annual undergraduate teaching by 56 hours or 23%. Consistent with higher per-day commute costs annual teaching days decrease by 27 while daily teaching hours increase by 0.49. Difference-in-difference estimates using faculty-specific changes in commute time corroborate these results ruling out aggregate confounders. Faculty substitute toward graduate teaching but decrease research output. The university accommodated the reduced teaching time primarily by increasing class sizes implying that education quality declined.

• Item Type: MPRA Paper
• Language: English
• Keywords: commuting; commute costs; labor supply; satellite campus
• Subjects: I - Health, Education, and Welfare > I2 - Education and Research Institutions > I23 - Higher Education ; Research Institutions; I - Health, Education, and Welfare > I2 - Education and Research Institutions > I25 - Education and Economic Development; J - Labor and Demographic Economics > J2 - Demand and Supply of Labor > J22 - Time Allocation and Labor Supply; R - Urban, Rural, Regional, Real Estate, and Transportation Economics > R2 - Household Analysis > R23 - Regional Migration ; Regional Labor Markets ; Population ; Neighborhood Characteristics; R - Urban, Rural, Regional, Real Estate, and Transportation Economics > R4 - Transportation Economics > R41 - Transportation: Demand, Supply, and Congestion ; Travel Time ; Safety and Accidents ; Transportation Noise

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