| This study examines the effect of commuting time variance on productivity. The benefits of urban transportation investments for commuters have been treated extensively, but the benefits to firms have received scant attention. Demonstrating that these investments can boost not only short-term consumption but also long-term growth would enable policy makers in developing countries to justify directing more resources to urban transport.;Commuter behavior is captured with a stochastic departure time model, using uniformly distributed travel times. Travel time data and institutional case study findings from Lahore, Pakistan are used to support the analysis.;Teamwork is identified as the main factor responsible for productivity losses when the transport system is unreliable. The proposition, that firms using teamwork-intensive technologies will set higher penalties for late arrival, is made but not tested empirically. Where labor laws and other institutional factors preclude high penalties, firms are forced either to absorb higher losses, or to adopt practices that reduce their vulnerability to unreliable arrival times. Such practices include: (1) purchasing and operating a bus service for company employees; (2) hiring spare or reserve workers; and (3) switching to technologies with lower teamwork intensity.;In industries where labor demand is elastic, and (2) or (3) is taking place, the model predicts that total employment will rise once public transport reliability is improved, even though the number of reserve workers falls. Thus in countries undergoing industrialization, the greatest employment gains would be in competitive and export-oriented markets. The model framework can be used to analyze the applicability of flextime policies to firms using teamwork-intensive technologies. It is also suggested that investments that reduce travel time variance, such as bus-only lanes, signal priority for buses, headway control measures, and improved traffic police enforcement are more cost-effective than previously thought, as compared with investments aimed at reducing average travel time, notably highway construction. |
