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A Distortive Wage Tax and a Countervailing Commuting Subsidy

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  • MATTHIAS WREDE

Abstract

Within a second‐best duocentric urban economics framework where labor income taxation distorts workplace choices on account of commuting costs, this paper studies a commuting subsidy, which distorts land use. It is shown that a commuting subsidy increases welfare if and only if it shifts labor supply from less to more productive business districts.

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  • Matthias Wrede, 2009. "A Distortive Wage Tax and a Countervailing Commuting Subsidy," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 11(2), pages 297-310, April.
    • Handle: RePEc:bla:jpbect:v:11:y:2009:i:2:p:297-310
    DOI: 10.1111/j.1467-9779.2009.01411.x
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    1. Alex Anas & Richard Arnott & Kenneth A. Small, 1998. "Urban Spatial Structure," Journal of Economic Literature, American Economic Association, vol. 36(3), pages 1426-1464, September.
    2. Wrede, Matthias, 2001. "Should Commuting Expenses Be Tax Deductible? A Welfare Analysis," Journal of Urban Economics, Elsevier, vol. 49(1), pages 80-99, January.
    3. Ian W. H. Parry & Antonio Bento, 2001. "Revenue Recycling and the Welfare Effects of Road Pricing," Scandinavian Journal of Economics, Wiley Blackwell, vol. 103(4), pages 645-671, December.
    4. Brueckner, Jan K., 2005. "Transport subsidies, system choice, and urban sprawl," Regional Science and Urban Economics, Elsevier, vol. 35(6), pages 715-733, November.
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    6. Fujita,Masahisa, 1991. "Urban Economic Theory," Cambridge Books, Cambridge University Press, number 9780521396455, January.
    7. Zenou, Yves, 2000. "Urban unemployment, agglomeration and transportation policies," Journal of Public Economics, Elsevier, vol. 77(1), pages 97-133, July.
    8. Arnott, Richard, 2007. "Congestion tolling with agglomeration externalities," Journal of Urban Economics, Elsevier, vol. 62(2), pages 187-203, September.
    9. Borck, Rainald & Wrede, Matthias, 2005. "Political economy of commuting subsidies," Journal of Urban Economics, Elsevier, vol. 57(3), pages 478-499, May.
    10. Wildasin, David E., 1985. "Income taxes and urban spatial structure," Journal of Urban Economics, Elsevier, vol. 18(3), pages 313-333, November.
    11. Matthias Wrede, 2001. "Tax Deductibility of Commuting Expenses and Leisures: On the Tax Treatment of Time-Saving Expenditure," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 57(2), pages 216-224, March.
    12. Wildasin, David E., 1986. "Spatial variation of the marginal utility of income and unequal treatment of equals," Journal of Urban Economics, Elsevier, vol. 19(1), pages 125-129, January.
    13. Parry, Ian W H & Bento, Antonio, 2001. " Revenue Recycling and the Welfare Effects of Road Pricing," Scandinavian Journal of Economics, Wiley Blackwell, vol. 103(4), pages 645-671, December.
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    Cited by:

    1. J. Malte Zoubek, 2018. "Spatial Productivity Differences and the Optimal Tax Treatment of Commuting Expenses," Volkswirtschaftliche Diskussionsbeiträge 187-18, Universität Siegen, Fakultät Wirtschaftswissenschaften, Wirtschaftsinformatik und Wirtschaftsrecht.
    2. Hirte, Georg & Tscharaktschiew, Stefan, 2013. "Income tax deduction of commuting expenses in an urban CGE study: The case of German cities," Transport Policy, Elsevier, vol. 28(C), pages 11-27.
    3. Tscharaktschiew, Stefan & Hirte, Georg, 2012. "Should subsidies to urban passenger transport be increased? A spatial CGE analysis for a German metropolitan area," Transportation Research Part A: Policy and Practice, Elsevier, vol. 46(2), pages 285-309.
    4. Fetene, Gebeyehu M. & Hirte, Georg & Kaplan, Sigal & Prato, Carlo G. & Tscharaktschiew, Stefan, 2016. "The economics of workplace charging," Transportation Research Part B: Methodological, Elsevier, vol. 88(C), pages 93-118.
    5. Georg Hirte & Stefan Tscharaktschiew, 2015. "Why not to choose the most convenient labor supply model? The impact of labor supply modeling on policy evaluation," ERSA conference papers ersa15p303, European Regional Science Association.
    6. Hirte, Georg & Tscharaktschiew, Stefan, 2011. "Income tax deduction of commuting expenses and tax funding in an urban CGE study: the case of German cities," Dresden Discussion Paper Series in Economics 02/11, Technische Universität Dresden, Faculty of Business and Economics, Department of Economics.
    7. Chaloupka, Christine & Kölbl, Robert & Loibl, Wolfgang & Molitor, Romain & Nentwich, Michael & Peer, Stefanie & Risser, Ralf & Sammer, Gerd & Schützhofer, Bettina & Seibt, Claus, 2015. "Nachhaltige Mobilität aus sozioökonomischer Perspektive – Diskussionspapier der Arbeitsgruppe "Sozioökonomische Aspekte" der ÖAW-Kommission "Nachhaltige Mobilität" (ITA-manu," ITA manu:scripts 15_02, Institute of Technology Assessment (ITA).
    8. Wrede, Matthias, 2015. "A continuous spatial choice logit model of a polycentric city," Regional Science and Urban Economics, Elsevier, vol. 53(C), pages 68-73.
    9. Vandyck, Toon & Rutherford, Thomas F., 2018. "Regional labor markets, commuting, and the economic impact of road pricing," Regional Science and Urban Economics, Elsevier, vol. 73(C), pages 217-236.
    10. Voßmerbäumer, Jan & Wagner, Franz W., 2013. "Steuerwirkungen betrieblicher Entgeltpolitik," arqus Discussion Papers in Quantitative Tax Research 144, arqus - Arbeitskreis Quantitative Steuerlehre.
    11. Matthias Wrede, 2014. "Continuous Logit Polycentric City Model," CESifo Working Paper Series 4580, CESifo.
    12. Baumgart, Eike & Blaufus, Kay & Hechtner, Frank, 2023. "The tax treatment of commuting expenses and job-related mobility," arqus Discussion Papers in Quantitative Tax Research 280, arqus - Arbeitskreis Quantitative Steuerlehre.

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