Commute Costs and Labor Supply: Evidence from a Satellite Campus

Shihe Fu, V. Brian Viard

Journal of Economic Geography 2018, 1-30, forthcoming

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Using the transition of undergraduate teaching from an urban to suburban campus and an exogenous increase in faculty’s commute time, we estimate the causal effect of commute costs on labor supply. Difference-in-differences estimates using individual commute time changes imply that the 1.0–1.5-h round-trip increase in commute time reduces annual teaching hours by 22 (8.4%). Substitution to alternative work activities is minor but class sizes increase and research output decreases. This suggests that work time is highly responsive to commute time for workers with flexibility and has important ramifications for transport policy, city growth and business strategies.

JEL-Codes: I25; R11; H43; I23; R41; J22; R23

Keywords: Commute costs, labor supply, value of time, satellite campus