The influence of job accessibility on individual labor income: Evidence for the City of Recife, Brazil

Abstract

Focused on the city of Recife, the fourth most densely populated state capital in Brazil, this study uses a probit model and precise and unique information about individuals' residential and job locations to estimate the effect of job accessibility on the individual probability of being a low-wage worker. To deal with the potential endogeneity of the job accessibility measure, we consider an instrumental variable based on the historical railways of the city. The results indicate that better job accessibility significantly reduces the chance of being a low-wage worker, and this effect is stronger for individuals using private vehicles than for those using public transport. The evidence indicates that the spatial location of an individual's residence matters for its labor market results and is consistent with the poor functioning of the city's public transport system.