Working papers in Transport Economics
Christer Anderstig, Svante Berglund, Jonas Eliasson, Matts Andersson and Roger Pyddoke
Congestion charges and labour market imperfections: “Wider economic benefits” or “losses”?
Abstract: The presence of distortive taxation and agglomeration
benefits in the labour market means that there are benefits and losses not
captured by standard cost-benefit analyses of transport policy measures.
Recent theoretical analyses have raised concerns that the labour market
effects of congestion charges may constitute considerable losses in the
form of reduced aggregate labour income, over and above what is captured by
the consumer surplus in the standard analysis of congestion charges –
possibly to the extent that congestion charges may reduce aggregate social
welfare, contrary to conventional wisdom in transport economics. The sign
and size of these effects are an empirical question, however. We
investigate this issue by estimating the labour income effects of the
Stockholm congestion charges, using an estimated relationship between
workplace accessibility and labour income. Results show positive effects on
labour income, meaning that the “wider economic benefits” of this system
are in fact benefits, not losses. It turns out to be crucial that the model
accounts for value-of-time heterogeneity in the income/accessibility
relationship and in the calculation of generalized travel costs.
Keywords: Congestion pricing; wider economic benefits; labour market distortions; cost-benefit analysis.; (follow links to similar papers)
JEL-Codes: D62; R41; R48; (follow links to similar papers)
19 pages, February 2, 2012
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