The impact of speed limits on labour sheds in the mountain west United States

Abstract

Many state-level policies impact the location decisions of both employees and employers. As most jobs require some form of commute, one such state-level policy impacting location choices are speed limits. We consider the effect of speed limits on the size of the labour sheds in the mountain west United States. Our analysis leverages the natural experiment of changing speed limits in the 281 counties of Arizona, Colorado, Idaho, Montana, Nevada, New Mexico, Utah, and Wyoming over the years 2004–2018. Utilizing the revealed commuting behaviour in the origin-destination data available through the Longitudinal Employer-Household Dynamics program we measure the geographic labour shed size as the radius of containment of commuters. Employing spatial panel methods to evaluate the significance of speed limits on the radius of containment we find evidence in favor of the hypothesis that higher speed limits correspond to larger labour sheds.