The location of employment has been treated as exogenous in the equilibrium
model described above. However, the existence of wage differences within a
common labor market is not permanently sustainable in a long run equilibrium
where firms must face equal production costs. Firms should redirect employment away from larger or more difficult commuting zones to those with fewer
workers and better commuting. In the process, commuting costs would decline
at larger existing centers and begin to rise at the newer centers. Eventually,
commuting costsand wagesshould equalize between centers of employment White 29 . If the distribution of transportation capacity is relativelyŽ .
uniform, then equal wages and commuting costs eventually imply some number
of equal-sized employment centers. This seems to be stylistically consistent
with the spatial structure of newer metropolitan areas in the South and West. In
older metropolitan areas, where significantly greater transport capacity has been
historically directed towards the center city, larger central employment could
co-exist with numerous smaller ‘‘edge cities’’ Richardson and Kumar 20 .Ž .
Even in this situation, long run equilibrium still dictates that commuting costs
and wages must equalize across different sized employment locations.Ž .
Thus, one explanation for why wagecommuting cost differentials would be
observed in cities is simply that employment locations are not in long-run
equilibrium. While the U.S. Census finds that 30% of American households
move every year, firms’ mobility is far less. Firms typically occupy specific
production facilities or are committed to locations with long-term leases.
Studies using the government’s census of firms have found that only a tiny
fraction of establishments actually move in any given year Struyk and JamesŽ
25 . The creation of new jobs, however, has increasingly been occurring in.
suburban ‘‘edge cities’’ Helseley and Sullivan 7 . This suggests that overŽ .
time, firms have been trying to better match their location to that of their