Commuting, Spatial Flexibility and Urban Wage Premium: Evidence from India

Ajay Sharma, Indian Institute of Management (IIM)
Shweta Bahl, Indian Institute of Management Rohtak

In this study, we estimate the wage returns to spatial flexibility through commuting. We measure the returns or penalties assigned to commuting for India using the Periodic Labour Force Survey, 2022-23, and the heteroskedasticity-based instrumental variables approach. We also test the wage level and wage growth effect hypothesis. Our main findings are as follows: a) wage premium to rural-urban commuters is 6.8 percent, whereas for urban-rural commuters, it is non-existent; b) we find evidence of wage level and wage growth effects in the Indian labour market; c) women rural-urban commuters earn 21 percent higher wages than rural women.

Keywords: Spatial Demography, Internal Migration and Urbanization, Inequality, Disadvantage and Discrimination, Gender Dynamics

See paper.