Do commuting subsidies increase commuting distances? Evidence from a Regression Kink Design

Publication date: Available online 13 February 2019Source: Regional Science and Urban EconomicsAuthor(s): Jörg PaetzoldAbstractI exploit a kink in the benefit scheme of a large commuter tax break to study the effect of subsidizing commuting costs on the commuting distance of employees. My results show a significant change in slope in the relationship between income and commuting distance exactly at the income level where the commuting subsidy becomes more generous. I test the robustness of this finding by using variation in the location of the benefit kink over time. My results indicate that commuting subsidies can indeed increase the length of the commute. This finding contributes to discussions about the efficacy of such subsidies, which often are justified on the grounds of making workers more mobile.

Source: Regional Science and Urban Economics - February 13, 2019 Category: Science Source Type: research