Title
Commuting, congestion tolls and the structure of the labour market: Optimal congestion pricing in a wage bargaining model Commuting, congestion tolls and the structure of the labour market: Optimal congestion pricing in a wage bargaining model
Author
Faculty/Department
Faculty of Applied Economics
Publication type
article
Publication
Amsterdam ,
Subject
Economics
Source (journal)
Regional science & urban economics. - Amsterdam
Volume/pages
39(2009) :4 , p. 434-438
ISSN
0166-0462
ISI
000267094300006
Carrier
E
Target language
English (eng)
Full text (Publishers DOI)
Affiliation
University of Antwerp
Abstract
In this paper we study optimal congestion pricing in a wage bargaining model. We first show that, compared to a competitive labour market environment, wage bargaining may lead to substantially different optimal transport taxes. Second, bargaining implies that exogenous increases in congestion levels and in transport taxes raise negotiated wages and reduce employment levels; the strength of these effects depends on the union's attitude towards transport issues. Third, we show that the optimal uniform transport tax positively depends on the impact of congestion on negotiated wages, and negatively on the wage effects of the congestion tax itself. Using a standard specification for union preferences, the optimal transport tax exceeds the marginal external congestion cost to the extent that transport flows include demand by people who have no employment. Finally, if taxes can be differentiated according to trip purpose, the tax structure implies shifting the tax burden away from the employed.
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