1. R ETURN TO COMMUTING IN S WEDEN Sergii Troshchenkov PhD student L.A.S.E.R

2. Return to commuting in Sweden The main idea is to estimate the return to commuting for the male and female subsamples of the population: Are employees compensated by employers for commuting expenses? Does gender matter?

3. Return to commuting in Sweden The policy application: Decreasing unemployment Suburbanization Improvement of the search—matching process Contribution: Comprehensive dataset based on administrative registers Addressing the endogeneity through the FE estimation Extensive set of variables that controls individual characteristics and features of the labor market

4. Return to commuting in Sweden Wage formation in Sweden The wage bargaining and setting minimum wages occurs between employer cartel and labor unions: Setting collective agreement Possibility of re-bargain small share of wage Unique feature Swedish labor unions are very strong (Laval case) Conclusion No immediate impact of unemployment rate on the wage level. The opposite story: regions with high wages are characterized by high unemployment rate.

5. Return to commuting in Sweden Earnings by region. Male sample Earnings by region. Female sample

6. Return to commuting in Sweden Commuting patterns: Median of travel distance: 8 kilometers –for females 12 kilometers—for males. The long-distance commuters earn less: 2300 hundreds of annual income in comparison to 3369 for “stayers” Evident spatial patterns of commuting

7. Return to commuting in Sweden Commuting by region. Male sample Commuting by region. Female sample

8. Return to commuting in Sweden The model: lnLoneInk0 it =α it +γ 1 dist it +γ 2 squaredist it +β 1 X it +z i +ε it i=1…T stands for cross-section units (individuals) t=1…K indicates time period α, γ and β are coefficients to be estimated X is a generic set of variables that captures lifecycle events and labor market conditions z reflects individual time invariant fixed effects

9. Return to commuting in Sweden Description of variables of main interest LnLoneInk0 indicates the annual earnings of individual received from the employment type of activity. Earning was considered in the interval 1500 hundreds SEK and 8518 hundreds SEK of gross annual income. dist is a variable that defines a commuting distance in kilometers for every individual calculated using Pythagoras formula on 100 meters span. Distance was considered on the interval between 0.25 and 80 km one way journey. squaredist is a squared term of commuting distance introduced in order to capture the concave profile of commuting in earning equation

10. Return to commuting in Sweden Description of the sample The data is (LOUISE) and Swedish National Tax Board. LOUISE: information about employment status, sources of earning, family conditions and education. Data from the Swedish National Tax Board: labor and non- labor earnings of individuals over an analyzed period. The sample – employed individuals in the age between 20 and 64 who experienced a job change in 2008. Separate analysis for males and females Students, people on parental leave and unemployed are excluded from the sample

11. Return to commuting in Sweden Initial assumptions for analysis Male sample One hour of commuting time which is approximately equal to 35 kilometers Hourly wage of 199 SEK (22.11 EUR) Female sample One hour of commuting time which is approximately equal to 35 kilometers Hourly wage of 174 SEK (19.33 EUR)

12. Return to commuting in Sw eden Results. Male sample: OLS Regression coefficients: Commuting distance coefficients of OLS is 0.000566 Squared term of the commuting distance divided by 100 is ̶ 0.0000129. Conclusions: individuals receive a compensation of 31 SEK (3.44 EUR) per one hour of daily commuting. It constitutes 16 % of hourly wage. FE Regression coefficients: Commuting distance coefficients of FE is 0.000305 Squared term of the commuting distance divided by 100 is ̶ 0.000156. Conclusions: individuals receive a compensation of 17SEK (2 EUR) per one hour of daily commuting. It constitutes 8.5 % of hourly wage.

13. Return to commuting in Sweden Results. Female sample: OLS Regression coefficients: Commuting distance coefficient of OLS is 0.000684 Squared term of the commuting distance divided by 100 is ̶ 0.000076. Conclusions: individuals receive a compensation of 33SEK (3.66EUR) per one hour of daily commuting. It constitutes 17 % of hourly wage. FE Regression coefficients: Commuting distance coefficient of OLS is 0.000301 Squared term of the commuting distance divided by 100 is ̶ 0.000217. Conclusions: individuals receive a compensation of 14 SEK (1.5 EUR) per one hour of daily commuting. It constitutes 7.3 % of hourly wage.

14. Return to commuting in Sweden Firm FE Male sample Regression coefficients: Commuting distance coefficient of FE is 0.00036 Squared term of the commuting distance divided by 100 is ̶ 0.000013. Conclusions: Individuals receive a compensation of 18,54SEK (1,95EUR) per one hour of daily commuting. It constitutes 10,8 % of hourly wage. Female sample Regression coefficients: Commuting distance coefficient of FE is 0.00033 Squared term of the commuting distance divided by 100 is ̶ 0.00007. Conclusions: Individuals receive a compensation of 17.53 SEK (1,83EUR) per one hour of daily commuting. It constitutes 9,34 % of hourly wage.

15. Return to commuting in Sweden Wage growth model Male sample Regression coefficients: Commuting distance coefficient is 0.000759 Conclusions: Individuals who commute one hour per day have 0.4% higher earnings growth rate Female sample Regression coefficients: Commuting distance coefficient is 0.000326 Conclusions: Individuals who commute one hour per day have 0.2% higher earnings growth rate

16. Return to commuting in Sweden Conclusions Results demonstrates similar relative return to commuting for men and woman The results are somewhat lower than in the previous studies In line with the theory of bargaining power that suggests this return to be between 0 and 30% Limitations Separated hourly wages and labor supply patterns would improve the picture of efficient job-search process/bargaining power process Introduction of commuting expenses would allow to estimate Net return to commuting

17. Thank you to your attention Author: Sergii Troshchenkov Email: sergii.troshchenkov@unimi.it