Abstract
We use a quantitative spatial general equilibrium model with potential commuting of workers to analyze the effects of rush hours on the spatial allocation of employment and population, the housing market, average labor productivity and welfare. We construct a measure of traffic congestion based on commuting time data for German districts in 2018 and use the model to quantify efficiency and welfare costs of rush hours. Reducing time lost in traffic by 50 percent raises the urbanization rate by 3.7 percentage points, average labor productivity by 0.8 percent and welfare by 3.5 percent. We also compare the role of commuting costs and housing markets as two major congestion forces with regard to urbanization, productivity, and welfare.
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