We develop a standard search-matching model in which mobility costs are so high that it is too costly for workers to relocate when a change in their employment status occurs. We show that, in equilibrium, wages increase with distance to jobs and commuting costs because firms need to compensate...

This paper analyzes the treatment of commuting expenses by the income tax code from a normative and a positive point of view within a continuous space framework with endogenous residence choices and perfect labor mobility. As commuting expenses should never be deductible from the income tax base...

This paper proposes the question whether or not traveling expenses to work should be deductible from the income tax base. In order to answer this question, a simple model of (im-) perfect household and worker mobility is employed. The focus of the analysis is on the efficient use of land and the...