Commuting barriers to low-wage employment

Abstract

Lack of access to affordable transportation has been hypothesized to be a barrier to employment among low-wage workers. We build a structural job search model to investigate how commuting costs influence the employment decisions of low-wage workers in the United States, and whether differences in commuting by race and education can explain observed disparities in employment. We find that commuting itself poses a significant barrier to overall low-wage employment, as the associated costs are high relative to potential wages. However, we find that inter-group differences in commuting costs account for a much smaller fraction of inter-group employment disparities than do differences in other labor market factors such as the wage offer distribution and offer arrival rates.