Browsing by Subject "Commuting"

The formation and determining factors of commute distance are of prime interest in the fields of urban and labour economics, as the length of the commute is a result of many different personal and economic factors. Knowledge of what factors affect the length of the commute could be of use in public policy as well as future research. Similarly, empirical studies on the effect of income specifically have historically shown mixed results due to bias resulting from reverse causality, and inadequate methods of correcting for it. To date, there has been little research on commuting in Finland, and no studies specifically focused on the effect of income. This study applies a cross-sectional linear regression model, as well as fixed effects model utilizing panel data to both survey the overall effects of a large catalogue of determinants of commute distance and correct for the issue of reverse causality in the income-commute relationship. The study focuses on the year 2020 but utilizes data from 2015 to construct the fixed effects model. The fixed effects model is used to determine the relationship between income and commute distance as it, by definition, corrects for omitted variable bias. In addition, with a data selection of workers who remain with their employer during the observational period, the reverse causality issue is eliminated. The results indicate that the relationship between income and commute distance in Finland is negative in the fixed effects model when reverse causality is eliminated, which contrasts with basic theory and a large majority of previous studies. Sensitivity tests suggest that this result is not merely a superfluous outcome of the data selection process, but a genuine result. Out of the other determinants, it was found that educational effects in Finland, especially for men, are different than what was expected, as higher education was associated with a decrease in commute distance. Being married, male and having a car were found to positively affect commute distances. The number of children in the household was found to be a negative factor, especially for women. The result of this study reinforces the notion that studying the relationship between income and commute distance without correcting for reverse causality will lead to biased estimates. Additionally, compared to the few previous studies that have sufficiently done so, this study suggests a pattern. As a negative relationship between income and commute distance has only currently been established in Denmark and Finland, as compared to the positive results in larger European countries, possible future studies could elaborate on whether this effect is characteristic of the Nordic countries, or smaller countries in general.