Reallocation of time after an exogenous reduction in mandatory travel: transport, work, and leisure in Chilean two-worker two-gender households

A two-step model framework is proposed and applied to analyze empirically the impact of a travel time reduction on labor supply in two-worker two-gender households, using a nationwide data set for time use collected in 2015 in Chile. First, a system of structural equations (SSE) is estimated to reveal which activities can be considered as committed, and to unveil the hierarchy of activities by gender undertaken by the household workers to help defining the labor supply model. Then a quadratic formulation including committed time for each individual and committed expenses for the family is applied to the time-use data to estimate a labor supply model, considering the findings with the SSE (hierarchy and committed activities). Results were obtained controlling for household size, region, and age, showing systematically that labor supply diminishes with the wage rates of either working member of the household (a forward falling shape), that committed expenses induces more work, and that diminishing mandatory travel time induces an increase in working hours that varies between 27 and 64 percent of the liberated time, in line with 2023 reports on the reallocation of liberated travel time due to remote working and confirming the theoretical findings by Jara-Diaz and Contreras (2024).