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Cost benefit-analysis of a transport improvement in the case of search unemployment

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  • Pilegaard, Ninette
  • Fosgerau, Mogens

Abstract

We examine the implications of search unemployment for the evaluation of a transport in-vestment in a conventional cost benefit analysis (CBA) assuming perfect competition. Lower transport costs induces search over a larger area and longer commuting distances. The ex-pected duration of vacancies is reduced with ensuing benefits outweighing the loss to in-creased transport. The search imperfection drives a wedge between the marginal product of labour and the wage, such that the final benefits of a transport improvement exceed those of a conventional CBA. Using a simulation model we find these additional benefits may be sub-stantial.

Suggested Citation

  • Pilegaard, Ninette & Fosgerau, Mogens, 2008. "Cost benefit-analysis of a transport improvement in the case of search unemployment," MPRA Paper 10037, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:10037
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    References listed on IDEAS

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    1. Yukihiro Kidokoro, 2004. "Cost-Benefit Analysis for Transport Networks: Theory and Application," Journal of Transport Economics and Policy, University of Bath, vol. 38(2), pages 275-307, May.
    2. Krugman, Paul, 1991. "Increasing Returns and Economic Geography," Journal of Political Economy, University of Chicago Press, vol. 99(3), pages 483-499, June.
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    Cited by:

    1. Börjesson, Maria & Isacsson, Gunnar & Andersson, Matts & Anderstig, Christer, 2018. "Agglomeration, productivity and the role of transport system improvements," Working papers in Transport Economics 2018:16, CTS - Centre for Transport Studies Stockholm (KTH and VTI).
    2. Hirte, Georg & Tscharaktschiew, Stefan, 2018. "The impact of anti-congestion policies and the role of labor-supply margins," CEPIE Working Papers 04/18, Technische Universität Dresden, Center of Public and International Economics (CEPIE).
    3. Raux, Charles & Souche, Stéphanie & Pons, Damien, 2012. "The efficiency of congestion charging: Some lessons from cost–benefit analyses," Research in Transportation Economics, Elsevier, vol. 36(1), pages 85-92.
    4. Börjesson, Maria & Kristoffersson, Ida, 2014. "Assessing the welfare effects of congestion charges in a real world setting," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 70(C), pages 339-355.
    5. Anderstig, Christer & Berglund, Svante & Eliasson, Jonas & Andersson, Matts & Pyddoke, Roger, 2012. "Congestion charges and labour market imperfections: “Wider economic benefits” or “losses”?," Working papers in Transport Economics 2012:4, CTS - Centre for Transport Studies Stockholm (KTH and VTI).
    6. Mogens Fosgerau & Kurt Van Dender, 2013. "Road pricing with complications," Transportation, Springer, vol. 40(3), pages 479-503, May.
    7. Bert van Wee & Piet Rietveld, 2013. "CBA: ex ante evaluation of mega-projects," Chapters, in: Hugo Priemus & Bert van Wee (ed.), International Handbook on Mega-Projects, chapter 12, pages 269-290, Edward Elgar Publishing.
    8. repec:mul:je8794:doi:10.1429/34355:y:2011:i:1:p:125 is not listed on IDEAS
    9. Moez Kilani & Ngagne Diop & Daniel De Wolf, 2022. "A Multimodal Transport Model to Evaluate Transport Policies in the North of France," Sustainability, MDPI, vol. 14(3), pages 1-16, January.
    10. Daniel G. Chatman & Robert B. Noland, 2014. "Transit Service, Physical Agglomeration and Productivity in US Metropolitan Areas," Urban Studies, Urban Studies Journal Limited, vol. 51(5), pages 917-937, April.
    11. Laird, James J. & Mackie, Peter J., 2014. "Wider economic benefits of transport schemes in remote rural areas," Research in Transportation Economics, Elsevier, vol. 47(C), pages 92-102.
    12. Eliasson, Jonas & Fosgerau, Mogens, 2019. "Cost-benefit analysis of transport improvements in the presence of spillovers, matching and an income tax," Economics of Transportation, Elsevier, vol. 18(C), pages 1-9.
    13. De Borger, Bruno & Fosgerau, Mogens, 2008. "The trade-off between money and travel time: A test of the theory of reference-dependent preferences," Journal of Urban Economics, Elsevier, vol. 64(1), pages 101-115, July.
    14. Hirte, Georg & Tscharaktschiew, Stefan, 2020. "The role of labor-supply margins in shaping optimal transport taxes," Economics of Transportation, Elsevier, vol. 22(C).
    15. Piotr Rosik & Julia Wójcik, 2022. "Transport Infrastructure and Regional Development: A Survey of Literature on Wider Economic and Spatial Impacts," Sustainability, MDPI, vol. 15(1), pages 1-19, December.
    16. 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.
    17. Robson, Edward N. & Wijayaratna, Kasun P. & Dixit, Vinayak V., 2018. "A review of computable general equilibrium models for transport and their applications in appraisal," Transportation Research Part A: Policy and Practice, Elsevier, vol. 116(C), pages 31-53.
    18. Avetisyan, Misak & Heatwole, Nathaniel & Rose, Adam & Roberts, Bryan, 2015. "Competitiveness and macroeconomic impacts of reduced wait times at U.S. land freight border crossings," Transportation Research Part A: Policy and Practice, Elsevier, vol. 78(C), pages 84-101.
    19. Jonas Westin, 2011. "Labor Market Effects of Road Pricing in a Population with Continuously Distributed Value of Time," ERSA conference papers ersa10p1458, European Regional Science Association.
    20. Andersson, Matts & Dehlin, Fredrik & Jörgensen, Peter & Pädam, Sirje, 2015. "Wider economic impacts of accessibility: a literature survey," Working papers in Transport Economics 2015:14, CTS - Centre for Transport Studies Stockholm (KTH and VTI).
    21. Fosgerau, Mogens & Pilegaard, Ninette, 2007. "Cost-benefit rules for transport projects when labor supply is endogenous and taxes are distortionary," MPRA Paper 3902, University Library of Munich, Germany.
    22. Börjesson, Maria & Kristoffersson, Ida, 2012. "Estimating welfare effects of congestion charges in real world settings," Working papers in Transport Economics 2012:13, CTS - Centre for Transport Studies Stockholm (KTH and VTI).
    23. Zhu, Xueqin & Van Ommeren, Jos & Rietveld, Piet, 2009. "Indirect benefits of infrastructure improvement in the case of an imperfect labor market," Transportation Research Part B: Methodological, Elsevier, vol. 43(1), pages 57-72, January.
    24. Avetisyan, Misak & Heatwole, Nathaniel & Rose, Adam & Roberts, Bryan, 2014. "Competitiveness and Macroeconomic Impacts of Reduced Wait Times at U.S. Land Freight Border Crossings," Conference papers 332435, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.

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    More about this item

    Keywords

    Cost-benefit; transport; search unemployment; welfare;
    All these keywords.

    JEL classification:

    • R42 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Government and Private Investment Analysis; Road Maintenance; Transportation Planning

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