the impacts of urban pricing on social and spatial inequalities the case study of lyon france with the aim of making a city sustainable this paper evaluates the impact of setting up urban toll on inequalities we use several indicators gini theil and atkinson indices to measure changes in the concentration of incomes and gravity based accessibility in the case of the lyon metropolitan area france we simulate a cordon pricing and evaluate its impacts on inequalities we adopt a comparison based approach to reduce the bias resulting from the spatial division in agreement with the literature we show that different inequality indicators produce contrasted and sometimes contradictory results both at the scale of zones or metropolitan level results from theil and atkinson indicators point out introducing a toll can reduce inequalities in the most peripheral zones although we observe an accessibility improvement particularly for central zones the first ring adjacent to the toll zone is the most adversely affected by toll

unanticipated aggregate disturbances and tests of the life cycle consumption model several recent studies have used data on food consumption from the panel study of income dynamics psid to test t he rational expectations life cycle hypothesis against the alternative of prevalent liquidity constraints these tests invoke the rational expectations restriction that income forecast errors are independent of lagged information this restriction however applies only in a time series context it is possible that unanticipated macroeconomic disturbances cause forecast errors to be correlated with lagged information in a cross section of families the authors present evidence of such a correlation in the psid data show that this correlation biases previous tests of the life cycle model toward rejection and derive a proper test of the life cycle model using pa nel data copyright 1993 by mit press

relaxing intertemporal separability a rational habits model of labor supply estimated from panel data this article relaxes the assumption of separability of preferences over time that although implausible is usually maintained in life cycle labor supply models an empirically tractable rational habits model is specified and estimated on the basis of a 10 year sample of men from the michigan panel of income dynamics the effect of past hours of work in determining current hours decisions is found to be very important and well determined having allowed for permanent individual differences and for time effects

the incidence of congestion tolls on urban highways abstract the incidence of an optimal short run congestion toll is investigated using an equilibrium model of modal choice and congestion on a highway corridor served by express bus transit it is argued that for an externality tax the usual equi revenue analysis of burdens is inappropriate instead welfare effects are computed under three alternative assumptions about redistribution of toll revenues in almost all cases the net result is benefits for all income groups it is concluded that congestion tolls should not be rejected on grounds of income distribution but that an explicit package of tolls and revenue uses is probably a political prerequisite for adoption

optimal commodity taxation and tax reform under unemployment this paper derives the optimal commodity tax formula and the tax reform rule which should be used in a situation of orthodox keynesian unemployment the setting considered is a four good one individual model with fixed real wage implying an excess supply of labor the presentation is very simple and based on intuitive and graphical arguments the emphasis is on comparing our results with the more traditional results derived under full employment

pigou meets mirrlees on the irrelevance of tax distortions for the second best pigouvian tax this paper extends the mirrlees 1971 model of optimal income redistribution with optimal corrective taxes to internalize consumption externalities using general utility structures and exploring both linear and non linear taxes it is demonstrated that the optimal second best tax on an externality generating good should not be corrected for the marginal cost of public funds since it equals one in the optimal tax system in the optimum distortions of income taxes are equal to marginal redistributional gains if the government does not have access to a non distortionary marginal source of finance the marginal cost of public funds can be either larger or smaller than one depending on subjective preferences for income redistribution the optimal second best corrective tax is then either higher or lower than the pigouvian level the findings in this paper generalize and amend prior results based on representative agent models shedding new light on the weak double dividend hypothesis and on the welfare gains of recycling revenue from environmental taxes

marginal commodity tax reforms a survey as noted 30 years ago by martin feldstein optimal taxes may be useless for practical purposes and emphasis should instead be placed on the possibility of enhancing welfare by reforming existing tax rates in this perspective marginal commodity tax reforms are gaining increasing attention due to political and economic constraints on large reforms of direct or indirect taxation in this paper we summarize the main features and results of the literature on marginal commodity tax reforms pioneered by ahmad and stern further developed by yitzhaki and thirsk and recently reinterpreted by makdissi and wodon we establish new links to other fields of research namely the literature on the use of equivalence scales and on poverty measurement we also critically examine some issues associated with the implementation of marginal tax reforms with special reference to the calculation of welfare weights and revenue effects finally we suggest directions for future research on poverty reducing commodity tax reforms

sustainability impacts of car road pricing a computable general equilibrium analysis for austria abstract nationwide car road pricing schemes are discussed across europe we analyse the impacts of such schemes with respect to environmental economic and social indicators of sustainability also quantifying the trade offs among these three dimensions under different charging principles and revenue recycling options in our analysis we employ a computable general equilibrium cge approach develop a modelling structure for private transport and provide detailed empirical analysis for the case of austria regarding the social dimension it has often been argued that poorer households and commuters would have to bear a disproportionate share of the road pricing burden we find the contrary i e a stronger negative policy impact on richer households and on a small group of intensive car users the choice of revenue recycling is able to ameliorate the negative social and economic effects of road pricing without reversing the desired positive environmental effects for political feasibility questions of distributional impacts are most urgent and therefore we address them systematically within a quantitative framework

chronic poverty in the united states this paper proposes a method of measuring chronic and transitory poverty using an axiomatically sound additively decomposable index of aggregate poverty our approach is contrasted with alternative methods of measuring poverty persistence we use our method to measure chronic and transitory poverty in the united states during the 1980s and late 1970s and find that chronic poverty is a more serious problem than previously thought between the late 1970s and mid 1980s poverty not only increased it became more chronic and less transitory in nature this is true for the population as a whole and for some but not all of the subpopulations we considered the latter were defined according to race type of social unit and educational qualifications of the head of the social unit all empirical analyses are based on data from the panel study of income dynamics

second best congestion pricing schemes in the monocentric city abstract this paper considers second best congestion pricing in the monocentric city with endogenous residential density and endogenous labour supply a spatial general equilibrium model is developed that allows consideration of the three way interactions between urban density traffic congestion and labour supply congestion pricing schemes are analysed that are second best by design and not because distortions exist elsewhere in the spatial economy like cordon charging and flat kilometre charges both for cobb douglas utility and for ces utility the analyses suggest that the relative welfare losses from second best pricing compared to first best pricing are surprisingly small

marginal tax reform externalities and income distribution the paper examines welfare improving and revenue neutral directions marginal policy reforms for an economy with nonidentical individuals and an externality that has a feedback effect on the consumption of taxed goods it considers three types of policy instruments the indirect taxes the uniform poll transfer and public abatement this extends the framework set up by ahmad and stern 1984 bovenberg and de mooij 1994 and schob 1996 the theoretical model is illustrated for a specific externality namely congestion caused by peak car transport

how robust is the uniform emissions pricing rule to social equity concerns abstract this paper examines pollution tax differentiation across industries in light of social equity concerns using theoretical and numerical general equilibrium analyses in an optimal tax framework we characterize the drivers for non uniform optimal taxes stemming from the interaction of household heterogeneity with social preferences quantitatively assessing the case of price based co2 emissions control in the u s economy we find that uniform emissions pricing is approximately optimal when social concerns are defined over inequity induced by the environmental tax the deviation from uniform emissions pricing however becomes non negligible when pollution tax rebates deviate much from optimal transfer schemes or when social concerns are defined over both policy induced impacts and inequity unrelated to environmental policy our results are robust to a number of model extensions including the stringency of the environmental target downstream vs upstream taxation pre existing distortionary taxes and parametric uncertainty in firms and households equilibrium tax responses

environmental policy public finance and the labour market in a second best world abstract environmental and tax policies and the optimal provision of clean and dirty public goods are analysed within the context of a second best framework of optimal taxation households consume both clean and dirty commodities degradation of the natural environment occurs due to the consumption of dirty private and public goods but can be offset when the government engages in abatement activities increased environmental concern implies a higher dirt tax a lower tax on labour less employment more public abatement and a cleaner environment if the elasticity of substitution between private consumption commodities and leisure is large and that between clean and dirty goods is small public consumption may expand while private consumption contracts otherwise public consumption falls

real wages over the business cycle evidence from panel data one topic on which keynes did not disagree with classical economists was the cyclical behavior of real wages keynes 1936 as well as various classical writers predicted that real wages should move countercyclically quoting the general theory p 17 in general an increase in employment can only occur through the accompaniment of a decline in real wages thus i am not disputing this vital fact which the classical economists have rightly asserted as indefeasible this prediction is based on the premise of competition and a given short run capital stock increases in employment then correspond to more intensive use of capital and through diminishing product lower real wages for this reason evidence by dunlop 1938 and tarshis 1939 that real wages move procyclically was viewed as paradoxical both dunlop and tarshis based their findings on an observed positive correlation between real and money wages which given the procyclical movement of money wages implies a positive correlation between

res diffusion and r d investments in the flexibilisation of the european electricity networks abstract the present analysis adds up to the discussion carried around the flexibilisation of the electricity networks as means of higher diffusion of renewable energy sources res inspiring from innovation studies the paper proposes an economic rationale for considering res technology manufacturers as investors in electricity networks moreover the present analysis scrutinize the extent to which the various economic operators within specific segments of the power supply chain invest in a portfolio of research and development activities among which the electricity grids and storage technologies the intensity of these research investments was mapped across the european countries for the year of 2011 their geographic distribution confirms the rationale of an analysis based on canonical correlation testing the associations between res market diffusion and power network indicators the analysis provides useful insights for specific technology such as the one revealing pv market sensitivity to research investments in storage technologies confirming a potential business model coupling the two technologies accommodating this pattern and enabling further diversification of research portfolios the public incentives could be redesigned in order to address the flexibilisation of power networks

data watch the panel study of income dynamics by collecting annual economic and demographic information from a large and representative sample of u s households for over a quarter century the panel study of income dynamics has compiled a remarkably useful set of microdata this article describes the psid and how its unique longitudinal and in some cases intergenerational features have been used for studies of intertemporal models of labor supply wages employment and job tenure consumption poverty dynamics extended family behavior and the intergenerational transmission of economic status

compact or spread out cities urban planning taxation and the vulnerability to transportation shocks this paper shows that cities made more compact by transportation taxation are more robust than spread out cities to shocks in transportation costs such a shock indeed entails negative transition effects that are caused by housing infrastructure inertia and are magnified in low density cities distortions due to a transportation tax however have in absence of shock detrimental consequences that need to be accounted for the range of beneficial tax levels can therefore be identified as a function of the possible magnitude of future shocks in transportation costs these taxation levels which can reach significant values reduce city vulnerability and prevent lock ins in under optimal situations

evidence on the validity of cross sectional and longitudinal labor market data this article investigates error properties of survey reports of labor market variables we use the panel study of income dynamics psid validation study a two wave panel survey of workers employed by a large firm that shared its detailed payroll records individuals reports of annual earnings are fairly accurate errors are negatively related to true earnings reducing bias due to measurement error when earnings are used as an independent variable biases are moderately larger for changes in earnings earnings per hour are less reliably reported than annual earnings biases in estimating earnings functions are relatively small but those in labor supply functions may be important

will a radical transport pricing reform jeopardize the ambitious eu climate change objectives abstract this paper examines the effects of replacing current fuel taxes by a system of taxes that account better for all the different external costs of the different transport modes one of the important implications of this reform is that current fuel taxes are decreased to a level of 80 euro ton of co 2 but that the mileage related taxes on car and truck use increase using the tremove model for the transport sector of 31 european countries one finds that the volume of transport will decrease because current taxes on transport are too low compared to overall external costs overall co 2 emissions will decrease slightly using the markal times model for the belgian energy sector putting all sectors and technologies on equal footing shows that a fuel tax reform makes that it is not cost efficient to require large co 2 emission reductions in the transport sector and that traditional car technologies will continue to dominate the car market in 2020 2030

on revenue recycling and the welfare effects of second best congestion pricing in a monocentric city abstract this paper examines congestion taxes in a monocentric city with pre existing labor taxation when road toll revenue is used to finance labor tax cuts 35 of the optimal road tax in our numerical model does not reflect marginal external congestion costs but rather functions as a ramsey mirrlees tax i e an efficiency enhancing mechanism allowing for an indirect spatial differentiation of the labor tax this adds a quite different motivation to road pricing since welfare gains can be produced even in absence of congestion we find that the optimal road tax is non monotonic across space reflecting the different impacts of labor supply elasticity and marginal utility of income which both vary over space the relative efficiencies of some archetype second best pricing schemes cordon toll flat kilometer tax are high 84 and 70 respectively when road toll revenue is recycled lump sum the optimal toll lies below its pigouvian level extensions in a bimodal framework show that the optimality of using road toll revenue to subsidize public transport depends on the initial inefficiency in public transport pricing

second best analysis with markets in disequilibrium public sector pricing in a keynesian regime the paper develops pricing rules for a public sector subject to a budget constraint in an economy where the private sector experiences keynesian unemployment excess supply of labour and of commodities both second best and welfare improving pricing rules are studied it is found that such rules can be defined in operational terms in general they are quite complex involve quantities which are not directly observable reservation wages and prices and require evaluation of income and employment multipliers the general equilibrium approach to second best theory thus involves standard macroeconomic concepts and techniques some discussion of methodological issues and of policy objectives inflation versus unemployment is offered in order to facilitate interpretation the corresponding results for an economy with a competitive private sector are first restated

intergenerational income mobility in the united states social scientists and policy analysts have long expressed concern about the extent of intergenerational income mobility in the united states but remarkably little empirical evidence is available the few existing estimates of the intergenerational correlation in income have been biased downward by measurement error unrepresentative samples or both new estimates based on intergenerational data from the panel study of income dynamics imply that the intergenerational correlation in long run income is at least 0 4 indicating dramatically less mobility than suggested by earlier research copyright 1992 by american economic association

does britain or the united states have the right gasoline tax this paper develops an analytical framework to assess the second best optimal level of gasoline taxation taking into account unpriced pollution congestion and accident externalities as well as interactions with the broader fiscal system we provide calculations of the optimal taxes for the us and the uk under a variety of parameter scenarios under our central parameter values the second best optimal gasoline tax is 1 01 gal for the us and 1 34 gal for the uk current tax rates are much lower than this in the us and higher in the uk the calculations are moderately sensitive to alternative parameter assumptions the congestion externality is the largest component in both nations revenue raising needs also play a significant role as do accident externalities and local air pollution potential welfare gains from reducing the current uk tax rate are estimated at nearly one fourth the production cost of all gasoline used in the uk even larger gains could be achieved by switching to a tax on vehicle miles with equal revenue yield for the us the welfare gains from optimizing the gasoline tax are smaller but those from switching to an optimal tax on vehicle miles are very large

optimal tax and public investment rules for congestion type of externalities optimal government policy is considered in a second best framework where consumers and producers cause an externality of the congestion type and income distribution issues are taken into account the theoretical results of the optimal tax literature are adapted using the concept of the net social pigouvian tax an illustrative age model uncovers the relative importance of its components the model demonstrates that the level of the externality tax does not depend strongly on distribution concerns as reoptimization of the other taxes ensures that the income distribution objective is reached the model also allows us to study the interaction between externality taxes and public abatement

a political economy model of road pricing abstract in this paper we use a simple majority voting model to study the introduction of urban congestion tolls the model allows for different types of uncertainty and considers different uses of the toll revenues the following results are obtained first we show that individual uncertainty with respect to modal substitution costs may imply that a majority votes against road pricing ex ante although a majority would have been in favor after its introduction ex post moreover if a majority is against road pricing ex ante there will also be no majority for organizing an experiment that would take away the individual uncertainty second political uncertainty with respect to the use of the revenues corroborates the finding that ex ante more voters will be against the introduction of tolls third both types of uncertainty suggest that fewer voters are against road pricing when toll revenues are used to subsidize public transport than when they are redistributed to all voters importantly the results of this paper are consistent with a number of recent empirical observations on efforts to introduce road pricing including the systematic rejection of road pricing in referenda the more favorable attitudes towards road pricing after than before its introduction and tying the toll revenues to support public transport

behaviors and housing inertia are key factors in determining the consequences of a shock in transportation costs this paper investigates the consequences of a sudden increase in transportation costs when household behaviors and building inertia are accounted for a theoretical framework is proposed capturing the interactions between behaviors transportation costs and urban structure numerical simulations show that changes in households and landowners choices reduce significantly the long term adverse effects of a shock in transportation costs indeed the shock translates over the long run into a more concentrated housing that limits households utility losses and maintains landowners income but because of building inertia the shock leads first to a long transition during which the adjustment is constrained by a suboptimal housing supply structure then households support larger losses than in the final stage though lower than with no behavior adjustment and landowners experience a large decrease in their aggregate income and an important redistribution of wealth thus behaviors and building inertia are key factors in determining the vulnerability to transportation price variability and to the introduction of climate policies our policy conclusions are that i if a long term increase in transportation costs is unavoidable because of climate change or resource scarcity a smooth change prevents to some extent the negative transition effects and ii fast growing cities of the developing world can reduce their future vulnerability to shocks in transportation costs through the implementation of policies that limit urban sprawl

the theory of reform and indian indirect taxes abstract given a set of value judgements an initial state and a model of the economy one can ask whether some feasible tax change would increase welfare we do this by defining the marginal cost in terms of welfare of raising an extra rupee from the i th good the inverse optimum problem is the calculation of non negative welfare weights on households which imply that the initial state is optimum if no such welfare weights exist then a pareto improvement is possible we illustrate the concepts and results using data from the indian economy for 1979 1980 directions of tax reform for a number of specific social welfare functions and for pareto improvements are presented

winning or losing from dynamic bottleneck congestion pricing the distributional effects of road pricing with heterogeneity in values of time and schedule delay abstract this paper analyses the efficiency and distributional impacts of congestion pricing in vickrey s 1969 dynamic bottleneck model of congestion allowing for continuous distributions of values of time and schedule delay we find that congestion pricing can leave a majority of travellers better off even without returning the toll revenues to them we also find that the consumer surplus losses or gains from tolling are not strictly monotonic in the value of time because they also depend on the value of schedule delays the greatest losses are not incurred by drivers with the lowest value of time but by users with an intermediate value of schedule delays and the lowest value of time for that value of schedule delays for second best pricing with an untolled alternative the pattern of distributional effects is quite similar to that for first best pricing in contrast with results from prior static models users who are indifferent between the two alternative routes are not the ones who gain least from this type of second best pricing our results suggest that in assessing the distributional impacts of road congestion pricing it is important to take into account both the distribution of the value of time and of the value of schedule delays as well as the dynamics of departure time choice

interpreting panel data on job tenure tenure responses in the panel study of income dynamics psid and the national longitudinal surveys are often inconsistent with calendar time these inconsistencies pose special problems in the psid because job changes cannot be identified directly so researchers must infer them from error ridden tenure data we use alternative rules for partitioning psid data into jobs and then estimate several wage and mobility models to assess the sensitivity of parameter estimates to the partitioning method we also assess the importance of replacing raw tenure data with imputed measures that are internally consistent

environmental taxes with heterogeneous consumers an application to energy consumption in france abstract this paper constructs a model with four groups of households who have preferences over labor supply consumption of polluting energy related and non polluting non energy goods and emissions it quantifies the model for the french economy and computes its optimal tax equilibria under nine second best tax regimes we find that the redistributive role of environmental taxes requires the polluting goods to be taxed at a rate much below their marginal social damage these goods may even require an outright subsidy if the society values equality a lot secondly if environmental taxes that have an exclusively externality correcting role they benefit all types although the gains are rather modest the gains and losses become more substantial when environmental taxes have a redistributive role as well third setting the environmental tax at its pigouvian level rather than its optimal externality correcting cum redistributive level benefits the high income group at the expense of the low income groups fourth nonlinear taxation of polluting goods and nonlinear commodity taxation in general is a powerful redistributive mechanism fifth introducing environmental taxes in the current french tax system with its suboptimal income taxes results in substantial welfare gains for the highest income group and a sizable loss for the least well off persons

labour supply and commuting abstract we examine the effect of commuting distance on workers labour supply patterns distinguishing between weekly labour supply number of workdays per week and daily labour supply we account for endogeneity of distance by using employer induced changes in distance in germany distance has a slight positive effect on daily and weekly labour supply but no effect on the number of workdays the effect of distance on labour supply patterns is stronger for female workers but it is still small

a longitudinal analysis of sibling correlations in economic status numerous previous studies have used sibling correlations to measure the importance of family background as a determinant of economic status the sibling correlations estimated in these studies however have been depressed by a failure to distinguish transitory and permanent income variation and in some cases by overly homogeneous samples this paper presents a methodology to address these problems and applies it to longitudinal data from the panel study of income dynamics our main conclusion is that family background exerts greater influence on economic status than has been indicated by most earlier research

optimal environmental taxation in the presence of other taxes general equilibrium analyses this paper examines the optimal setting of environmental taxes in economies where other distortionary taxes are present we employ analytical and numerical models to explore the degree to which in a second best economy optimal environmental tax rates differ from the rates implied by the pigovian principle according to which the optimal tax rate equals the marginal environmental damages both models indicate contrary to what several analysts have suggested that the optimal tax rate on emissions of a given pollutant is generally less than the rate supported by the pigovian principle moreover the optimal rate is lower the larger are the distortions posed by ordinary taxes numerical results indicate that previous studies may have seriously overstated the size of the optimal carbon tax by disregarding pre existing taxes this abstract was borrowed from another version of this item

household transport demand in a cge framework the main objective of this study is to improve the modelling of household demand for transport services in a computable general equilibrium cge model the new extended model is then used for numerical calculations to test how the swedish economy reacts to a carbon target special attention will be given to distributional effects and the connection between labour supply and work journeys in a sparsely populated country like sweden a differentiation between trip purposes and trip length a complementary relationship between work journeys and labour supply and a subdivision of households by density of population and income influence the numerical results our main conclusions from the analysis of a carbon target are that if the carbon tax revenue is recycled by decreasing the employers social contribution fee welfare costs are lower than with lump sum replacements of tax revenue to households the welfare cost may be reduced even further if work journeys are not additionally taxed as compared to the base year however the lower total welfare cost is obtained at the expense of making society more unequal since both labour tax recycling cuts in employers social contributions and exempting tax on work journeys will make low income groups carry a higher burden an increased carbon dioxide tax is also shown to increase welfare differences between sparsely populated areas and city regions in sweden

tax revenue and the marginal cost of public funds in sweden abstract we assess the welfare cost of raising a marginal unit of tax revenue in a balanced budget general equilibrium framework the calculated social cost of an increment of public funds is sensitive to both the specific type of tax increase and the type of public spending used on the margin best guess assumptions on labor supply elasticities yield marginal costs of public funds for different fiscal mixes of between 0 67 and 4 51 at prevailing tax rates in sweden alternative labor supply assumptions well within the range of current estimates substantially affect the results and can imply infinite marginal welfare costs marginal welfare costs are also sensitive to assumptions about both the income and substitution effects of labor supply

funding transportation spending in metropolitan washington dc the costs of alternative revenue sources abstract this paper develops and implements an analytical framework for estimating the efficiency costs of raising additional revenue from taxes on labor property gasoline peak road use and higher transit fares for the washington dc area the model incorporates driving externalities and interactions between the different policies an economic case can be made for using congestion taxes and possibly gasoline and property taxes to raise extra revenue though it should be qualified for example the inelastic demand for driving limits the congestion benefits per dollar of revenue raised and these taxes have adverse employment effects in the same way that a tax on labor income does

real wages and the business cycle the objectives of this review are threefold 1 to characterize the empirical literature on the cyclical behavior of real wages 2 to identify the sources of the differences in results across studies and 3 to enumerate key factors that determine the cyclicality of real wages given a host of measurement and methodological issues drawing firm conclusions is difficult but several generalizations can be made the estimated cyclicality of real wages depends crucially on the time period of analysis and the choice of whether to examine the production or the consumption wage composition effects play an important but complicated role as well

environmental tax design with endogenous earning abilities with applications to france abstract this paper studies environmental taxation in a mirrlees setting with two novel features first energy a polluting good is used both as a factor of production and a final consumption good second the wage is determined endogenously while labor of different individual types remain homogeneous the model is calibrated for the french economy we show that i the optimal tax is less than the marginal social damage of emissions and turns into an outright subsidy when the inequality aversion index is high ii the optimal tax on energy as an input is always equal to its marginal social damage iii the social welfare gain due to lowering the current energy taxes to their optimal levels with the general income tax being set optimally in both cases is between 17 and 32 euro per household this hurts the rich and benefits the poor

wage variability in the 1970s sectoral shifts or cyclical sensitivity the recent debate questioning whether unemployment in the 1970s represents sectoral adjustment or cyclical variation is expanded to examine comparable causes of real wage variability using panel study of income dynamics panel data real wages respond more to persistent sectoral shocks than cyclical shocks in the 1970s making recent estimates of procyclical wage variability appear weak in perspective employing a model of endogenous sector specific individual skills older workers earning economic rents are shown to have the greatest wage response to sectoral shocks these results are consistent with the hypothesis that short run cyclical shocks may be met with hours adjustment as specified in implicit or explicit contracts but that persistent shocks require wage adjustment copyright 1989 by mit press

redistribution and pollution taxes with non linear engel curves abstract this paper analyses optimal corrective taxation and optimal income redistribution the pigouvian pollution tax is higher if pollution damages disproportionally hurt the poor due to equity weighting of pollution damages moreover under general utility functions optimal pollution taxes should be set below the pigouvian tax if the poor spend a disproportionate fraction of their income on polluting goods however if engel curves are linear optimal pollution taxes should follow the first best rule for the pigouvian corrective tax even if the government wants to redistribute income and the poor spend a disproportional part of their income on polluting goods the often used quasi linear ces and stone geary utility functions all have linear engel curves if engel curves are linear and if pollution taxes are not optimised pareto improving green tax reforms exist that move the pollution tax closer to the pigouvian tax simulations demonstrate that optimal corrective taxes should be pigouvian if the demand for polluting goods is derived from a les demand system but deviate from the pigouvian taxes if demand for polluting goods demand is derived from a piglog demand system

commuting and labour supply revisited according to theory road pricing may reduce welfare when labour supply is negatively distorted by an income tax this effect particularly occurs when commuting costs reduce labour supply we examine the hypothesis that commuting costs reduce labour supply in the short run in particular we estimate the effect of commuting time on labour supply in the uk we account for endogeneity of commuting time by employing exogenous changes in commuting time resulting from firm relocations and changes in infrastructure our results cast doubt on the idea that increases in commuting cost reduce labour supply at least in the short run more precisely we find that females labour supply reacts positively to or is unaffected by increases in commuting time whereas males labour supply is unaffected

transport taxes with multiple trip purposes a congestible urban transport system is considered in which cars and buses are used for commuting and non commuting trips commuting is a strict complement to taxable labour supply the optimal tax structure for raising a given amount of government revenue is examined for the cases where differentiation of transport tolls between trip purposes is and is not possible an application to belgian urban environments shows that optimal toll differentiation produces significant efficiency improvements without differentiation reforming transport taxes generates substantial gains only when the labour tax can be reduced

reevaluating the first and the second dividends of environmental tax reforms abstract there is increasing global interest in market based climate change policies following the last elections in the united states in this context an exxon mobil chief executive came out in favour of a carbon tax this paper is concerned with the welfare analysis of environmental tax reforms etr and takes up the claims for the need of an unambiguous and operative definition of the double dividend both for empirical purposes and political advisement in this paper we contest the usual definition of the second dividend and its assimilation to an efficiency dividend we propose alternative definitions by suggesting a different splitting of the total welfare variation between the first and the second dividend in order to isolate the efficiency effects of the etr the new definitions become clearly understandable and easy for economic and policy interpretation concepts like weak and strong double dividend turn out to be unnecessary finally we analyze etr for the us economy to illustrate the advantages of the proposed definitions for policy implementation

support and opposition to a pigovian tax road pricing with reference dependent preferences abstract loss aversion can affect support and opposition to pigovian taxes to reduce externalities this paper studies road pricing with reference dependent preferences modeled by a linear gain loss utility function given this specification we find that the socially optimal road toll is smaller than the optimal toll in the absence of reference dependence and it declines in the degree of loss aversion loss aversion can also explain the empirical observation that support for road pricing is lower before than after its introduction we further show that loss aversion may increase or reduce lobbying efforts by driver organizations against the introduction of tolling it will increase lobbying if a high toll is proposed but drivers initially believe that the probability that it will be introduced is small lastly loss aversion unambiguously reduces lobbying by organizations of non drivers representing for example environmentalists or public transport users in favor of the introduction of a toll