Cross-border commuting and consuming: an empirical investigation |
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Authors: | Thomas Y Mathä Alessandro Porpiglia Michael Ziegelmeyer |
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Institution: | 1. Central Bank of Luxembourg;2. MEA, Munich |
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Abstract: | This article contributes to our understanding of cross-border activity in general and the determinants of cross-border trade in particular by focusing on the part of cross-border sales that arise due to work-related cross-border crossings of households. We analyse empirically how cross-border consumption expenditures vary across product and services categories as well as household characteristics using representative household survey data of cross-border commuters to Luxembourg. In total, these households spend an estimated 17% of their gross annual income across the border, contributing about 10% to the total household final consumption expenditure (HFCE) in Luxembourg. Cross-border expenditure is linked to individual- and household-related characteristics and to distance between home and work. Cross-border commuters systematically exploit arbitrage opportunities that arise because of existing price level (index) differences between the country of work and the country of residence. |
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Keywords: | Cross-border shopping commuting consumption expenditure households arbitrage |
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