Backward-bending labor supply and urban location

Abstract

This study attempts to combine a labor supply model with a housing location model. We focus on the trade-off between hours of work, commute times, and leisure time as well as the trade-off between the consumption of a good, housing space, and leisure time. We show that both labor supply and urban location choice have an inverted U-shaped relationship regarding the wage rate. These results are empirically shown by using Japanese data on the hours of work and commute times by household income class and on the number of households by income class.