Interpreting employee telecommuting adoption: An economics perspective

Travel demand is derived from activities at the trip destination; therefore, media that have the potential to provide services previously only supported by transportation will have a chance to be chosen by passengers. The idea of telecommuting is considered the most promising substitute of work trips and thus a good strategy of transportation demand management. From a microeconomics perspective, demand for goods or services can be interpreted as a function of prices and generalized income. Therefore, telecommuting adoption is viewed as a trade-off among the prices of telecommuting itself, substitutes, and complements, as well as generalized income and situational constrains incurred by the employee. The underlying rationale is interpreted by elasticity analysis of aggregate telecommuting demand, based on an adoption model, with respect to various decision variable. The results indicate that the elasticity with respect to the price that the employee may incur in order to telecommute is the largest one, and the elasticity with respect to the living space at home is the second one. Additionally, all of the elasticities found in the group of employees currently commuting by private transportation are greater than the corresponding ones found in the group of transit riders. These findings are expected to have significant implications of transportation policies. This revised version was published online in June 2006 with corrections to the Cover Date.