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The structure of the labour market, telecommuting, and optimal peak period congestion tolls: A numerical optimisation model

  • DE BORGER, Bruno
  • WUYTS, Bart

This paper develops a numerical optimisation model to study optimal labour and peak-period congestion taxes under different assumptions on the structure of the labour market. We consider both a competitive labour market and various wage bargaining models, in which wages are determined via negotiations between firms and labour unions. All models include commuting and non-commuting transport, and they allow for telecommuting. The models are numerically implemented using Belgian data. We find that wage bargaining models may imply higher or lower congestion tolls on peak period car traffic compared to competitive labour markets, depending on the response of unions to transport issues and the composition of the traffic flow. If unions care about the effect of congestion and congestion tolls on their members’ well being, we find the optimal congestion toll for the wage bargaining model to be 15%-20% lower than under competitive labour market conditions. However, if unions do not care about their members’ transport problems when negotiating about wages and employment, then the optimal congestion tax is up to 50% higher under bargaining than under competition. We further find that the optimal tax structure results in substantially more telecommuting for all labour market structures considered. Finally, improving the efficiency of telecommuting results in a considerable reduction in optimal congestion tolls.

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Paper provided by University of Antwerp, Faculty of Applied Economics in its series Working Papers with number 2010013.

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Length: 40 pages
Date of creation: Jun 2010
Date of revision:
Handle: RePEc:ant:wpaper:2010013
Contact details of provider: Postal: Prinsstraat 13, B-2000 Antwerpen
Web page: https://www.uantwerp.be/en/faculties/applied-economic-sciences/

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  15. Keeler, Theodore E & Small, Kenneth A, 1977. "Optimal Peak-Load Pricing, Investment, and Service Levels on Urban Expressways," Journal of Political Economy, University of Chicago Press, vol. 85(1), pages 1-25, February.
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  18. Creedy, John & McDonald, Ian M, 1991. "Models of Trade Union Behaviour: A Synthesis," The Economic Record, The Economic Society of Australia, vol. 67(199), pages 346-59, December.
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