>people would have an incentive to work closer to where they live
Again this is easy to say for people who have already made the decision. If over night cars became illegal many people would now be stuck with basically unlivable properties since there is no public transportation or at least not good ones.
I could move closer to my office, but I would have to pay twice as much for same living space and that is now when cars still are a thing. The prices would go up by quite a bit if you literally couldn't live further away. At least this is what I hope you mean, if you mean that I should instead look for a job near me then that would just be silly.