Job commuting and home moving: an extended Pissarides-style spatial model

This paper studies the effects of commuting and moving on job creation and job mobility. In general, commuting increases the reservation wage and reduces job creation. Furthermore, when job mobility is introduced into the model, the commuting cost also distorts the optimal allocation of workers among regions. In case of better outside job offers, therefore, job seekers should move close to the new workplace. Moving, however, depends on the ‘housing liquidity’ problem that gets worse when more and more individuals are choosing to move. Finally, the model is extended in several directions to consider some recent empirical findings.