Commuting patterns and Firm
Decentralization
Introduction
• This paper written by Robin Dubin exams commuting
patterns of employed individuals and firm decentralization
by testing the monocentric model.
• By examining the monocentric model, the paper will show
us how sex, income, race, household responsibilities,
residential and job mobility determine commuting behavior
as firms decentralize.
• Monocentric model
Most employed individuals must travel between home and work on a daily
basis, work place commuting thus has provided the point of departure for
the monocentric model of residential location. In the monocentric situation,
all employment is located at the central business district; decentralized firm
location enables workers to shorten their commutes as firms have left the
central business district, to move into the residential area. One of the major
behavioral assumptions of the monocetric model is that comsumers prefer
less commuting to more. Hence the model predicts that workers will take
advantage of firm decentralization.
• Assumption
(a) The employees are willing to move in order to be near the new suburban
location (people prefer less commuting)
(b) The firm’s employees are located in one portion of the city so that the firm
can locate nearer to them by suburbanizing;
(c) the firm can change employees and thereby employ people who live near
the new location.
Discussion
• Suppose homogeneous jobs, workers and housing,all employment is
located in the central business district. If a firm suburbanized, in the very
short run, total commuting in the city will increase. But two adjustments
reduce commuting: workers can follow the firm, and the company can
hire new workers that live near the new location. Commuting will reduce
eventually.
• More realistically, workers differ by incomes, preferences or training;
Jobs differ by skill requirements, and the housing stock is not
homogeneous. Workers are not indifferent among all residential sites and
thus may very well be unwilling to move even if such moves reduce
commuting costs. If workers are reluctant to change houses or jobs,
decentralization may increase, rather than decrease, total commuting!
• Individuals’ income, job characteristics, residential characteristics and
some other factors may have some effect on determining their commuting
patterns.
Empirical Model
The monocentric model is based on a separation of the house and work
place. Therefore, this separation can be measured either in terms of
commuting time(T) or distance(D).
• Monocentric vs. Actural commuting
ΔD(Δ T)= HYP – ACTUAL
where
_ ΔD (Δ T) is the distance (or time) the worker would have to travel if he
were employed in the CBD minus the atural commute
_HYP is hypothetical monocentric commute( in miles or minutes)
_ ACTURAL is actual commute (in miles or munites)
If the commute is shorter in the presence of suburbanization, ΔD(ΔT)
will be positive, which is predicted by monocentric model;
If the worker commute farther than he would if his job were located in
CBD, then suburbanization has increased his commute, and ΔD(ΔT)
will be negative.
Actual commuting
ACTUAL=  0 + OPT +  1HDEQ +  2JDEQ + U1
Where
OPT is optimal commute (not directly observed)
HDEQ is residential location disequilibrium factor (ndo)
JDEQ is employment location disequilibrium factor (ndo)
U is random, unexplained disturbances
Optimal commuting
OPT = δ0 +δ1BEN + δ2COST +δ3 F + U2
Where
BEN is the benefit of commuting an additional mile
COST is the cost of commuting an additional mile
F is number of full-time workers in household
Commuting Benefit
BEN= λ0 + λ1PCHILD + λ2Y +U3
Where
PCHILD =0 if no children under 12, =1 otherwise
Y is household income (annual income in hundreds of dollars)
Commuting cost
COST= θ0 + θ1Y + θ2MODE +θ3 HR +U4
Where
MODE is transportation mode (0= auto, 1= bus)
HR is household responsibilities (not directly observed)
Household responsibilities
HR = ρ0 + ρ1PCHILD +ρ2NADULT + ρ3F + ρ4SEX + U5
Where
NADULT is number of household members older than eighteen
SEX = 0 for male, =1 for female
Residential disequilibrium
HDEQ= α0 +α1OWNRNT + α2L + α3RACE + α4PCHILD + α5Y + U6
Where
OWNRNT is residential tenure (0= own, 1=rent)
L is length of time at current location (1=< 6mos., 2=7-12 mos.,
3=13-24 mos., 4=> 2 yrs.)
Race =0 for White, =1 for Black
Job disequilibrium
JDEQ= γ0 +γ1 Y+γ2TEN +γ3 TS +γ4 RACE +γ5SEX + U7
Where
TEN is job tenure
TS is dummy variable representing job skills that are highly transferable
(1=service or sales workers, 0= any other occupation)
Hypothetical monocentric commute
HYP = μ0 +μ1 PCHILD+μ2 Y+μ3 JDIST+ U8
Where
JDIST is distance of job from the CBD
ΔD (ΔT)=П0+ П1Y +П2 MODE +П3 PCHILD +П4 NADULT +П4 F
+П5 OWNRENT +П7 L+П8 RACE+П9 SEX+П10 TS+П11 JDIST
+П12 TEN+ε
~ The expected signs on the Пi can be derived from the expected signs on the
coefficients of the structural equations.
~ The coefficients for SEX, TS, OWNRENT, MODE and JDIST are expected
to be positive. This means that women, workers with highly transferable job
skills, renters, public transit users, and workers whose jobs are located far
from the CBD are all expected to use firm decentralization to shorten their
commutes.
~ Coefficients of Race, NADULT, L, AND TEN are all expected to have
negative coefficients. Being black, having more adults in the household and
having longer residential or job tenure should adversely affect a worker’s
ability to take advantage of firm decentralization.
~ Coefficients of Y, PCHILD, and F can’t be determined. Because high income
workers located far away from CBD, but also have a high cost to change
their job, they affect ΔD(ΔT) in opposite ways. Regarding PCHILD, the
relationship between the presence of children and residential mobility is
unknown. Finally for F, increased household responsibilities increase
ΔD(ΔT), while the difficulty of optimizing with respect to two or more work
places reduces it.