Julia Cajal Grossi, The Graduate Institute Geneva

"Workers in Space: Evidence from Urban Bangladesh"


We study urban spatial frictions in the context of the garment-for-exports sector in Bangladesh, using detailed high-frequency data on garment workers' employment. We show several stylized facts consistent with severe spatial frictions, above and beyond typically documented commute costs. First, export shocks to garment plants increase hiring at the plant, and also induce churning of workers in nearby plants. Second, work-home commutes are on foot and very short, despite workers' willingness to commute longer distances for better pay. Third, job switches are valuable and also hyper-local. Despite relatively high factory density in Bangladesh, there is considerable dispersion in wages and other job attributes, yet wages at nearby factories are strongly correlated. Thus, access to jobs at a moderate distance is valuable for workers. Finally, we measure that workers only have hyper-local information about job opportunities. A simple partial-equilibrium job-search model shows that the welfare implications of reducing spatial frictions are ambiguous in the presence of information frictions.

Joint with Gabriel Kreindler

Contact person: Neda Trifkovic