Ongoing research projects
Endogenous commuting time valuations and the leisure-labour trade-off in quantitative spatial modelling
Current practices in transport policy appraisal are mostly restricted to partial equilibrium modelling, creating a natural need to explore new ways to understand the spatial general equilibrium impacts of transport interventions. The emerging literature of quantitative spatial economics offers new opportunities in this respect. However, this literature is limited by the assumption of unidimensional `iceberg' travel and trade costs. Due to the coexistence of temporal and pecuniary travel costs the theoretical description and empirical measurement of the monetary value of travel time savings has been a central theme of transport research for decades. This paper bridges a gap between spatial and transport economics by developing a quantitative spatial model with endogenous travel time valuations. We capture the leisure-labour trade-off in location-dependent household decisions. Thus the paper relaxes another common assumption in quantitative spatial models: the exogeneity of individual labour supply. We present a numerical implementation of the model which illustrates (previously neglected) spatial heterogeneity in travel time valuations and highlights the relevance of our contribution in practical transport appraisal.