Commuting farther and earning more? How employment density moderates workers' commuting distance

Over the past several decades, most industrialized countries have experienced a rise in commuting distances, spurring scholarly interest in its determinants. The primary theoretical explanation for longer commuting distances is based on higher wages; however, empirical evidence is minimal. We argue that commuting indeed often results from changes to jobs with higher wages. However, local labor market opportunities strongly moderate individuals' responsiveness to wage changes, resulting in diverse wage effects determined by the place of residence. Using German survey data linked to administrative information with a mixed-effects design, we find that when changing jobs the effect of wages on commuting distances rises substantially according to the local labor market density. While residents in the least dense areas do not adjust their commuting distance substantially in response to a wage change, residents in areas with the highest employment density are highly responsive. This result indicates the need to take into account the regional labor market structure when analyzing commuting patterns as local opportunities strongly influence the adjustment process of commuting distances. Particularly commuters from economic centers seem to adjust their distances to a great degree.