SMU SOE Seminar (Dec 18, 2019, 4-5.30pm): How Well does the Gravity Equation Describe Commuting Flows?

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ABSTRACT We document that commuting matrices feature pervasive zeros. How should researchers apply the gravity equation to sparse commuting matrices? The extant literature typically ignores zeros when estimating elasticities and rationalizes zeros with infinite commuting costs. We show that the former introduces a selection bias into estimated elasticities. The latter eliminates potential margins of adjustment when computing counterfactual outcomes. We propose treating observed commuting matrices as finite-sample realizations from a discrete probability distribution. Unlike standard methods, our approach allows residence-workplace pairs that currently have zero commuters to become active commuting routes in counterfactual scenarios. Click here to view the CV.
		PRESENTER Jonathan Dingel University of Chicago Booth School of Business
		RESEARCH FIELDS International Trade Economic Geography Urban Economics
		DATE: 18 December 2019 (Wednesday)
		TIME: 4pm - 5.30pm
		VENUE: Meeting Room 5.1, Level 5 School of Economics Singapore Management University 90 Stamford Road Singapore 178903