Does accessibility matter? Understanding the effect of job accessibility on labour market outcomes

In this study, we examine the effect of access to employment opportunities on labour market outcomes, especially focusing on unemployment rates and household income in the Chicago metropolitan area during 2000-2010. Using accessibility measures derived from detailed employment data, we calculate job accessibility by race and income. In order to deal with the endogeneity problem, we employ instrumental variables with a generalised spatial two-stage least square (GS2SLS) model with fixed-effects. Our findings suggest that job accessibility plays a significant role in explaining unemployment rates and household income. Consistent with Kain's spatial mismatch hypothesis, increases in job accessibility for African Americans lead to decreases in unemployment. Results also show that increased job accessibility for low-income households not only reduce unemployment but also improve household income.