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The effect of search imperfections on commuting behaviour: Evidence from employed and self-employed workers

By Jos N. van Ommeren and J. Willemijn van der Straaten

Abstract

We aim to estimate the effect of search imperfections on the length of the average commute. We start from the assumption that the commute of the self-employed is the result of a search process for vacant workplaces, whereas employees search for vacant jobs. Because the arrival rate of workplaces is much higher than the arrival rate of jobs, the self-employed minimize the commute, whereas employees may have to accept jobs with a longer commute. In the empirical analysis, the extent of the 'wasteful' or 'excess commuting' is identified by estimating the difference in the commute of employees and self-employed individuals. Our estimates indicate that about 40 to 60% of the observed commute may be considered 'excess' due to search imperfections. We reject a range of alternative hypotheses as to why the self-employed have a shorter commute than employees (self-selection of not working from home, preference for residence and workplace locations, characteristics of workers which are difficult to observe).

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