I don't think there's any totally right answer. People who live further away might have lower cost of accomodation, meaning less living expenses, meaning and ef

I don't think there's any totally right answer. People who live further away might have lower cost of accomodation, meaning less living expenses, meaning and effective pay rise! "Getting to the office" costs can be "cost of location + cost of getting there". If you live far away, "cost of location" can be less, but "cost of getting there" can be higher. If you live close, then "cost of location" can be higher, but "cost of getting there" is lower (sometimes zero if you can walk). Subsidizing the transit costs is common and only subsidises "cost of getting there", why not also subsidise the "cost of location" for those who don't have a high number on the "cost of getting there" side?