The Effect of a Change in Wages on Welfare in a Two–Class Monocentric City

This paper performs a comparative static analysis to derive the effect of a change in the wages of the rich living in the suburban area of a city on the welfare of the poor living in the central area of the city. It assumes that commuting cost is a function of distance and wages. A sufficient condition for an increase in the wages of the rich to harm the welfare of the poor is that the time cost of commuting is greater than the operating cost of commuting.