energy efficiency and the cost of ghg abatement a comparison of bottom up and hybrid models for the us a highly influential report by the mckinsey consulting firm suggests that a large potential for profitable energy efficiency exists in the us and that substantial greenhouse gas emissions reductions can therefore be achieved at a low cost this result is consistent with other studies conducted using a bottom up methodology that dates back to the work of lovins beginning in the 1970s research over the past two decades however has identified shortcomings with the conventional bottom up approach and this has led to the development of new analytical frameworks that are referred to as hybrid energy economy models using the cims hybrid model we conducted simulations for comparison with the mckinsey results these exercises suggest a more modest potential to reduce greenhouse gas emissions at a given marginal cost as well as a smaller contribution from energy efficiency relative to other abatement opportunities such as fuel switching and carbon capture and storage hybrid models incorporate parameters reflecting risk and quality into their estimates of technology costs and our analysis suggests that these play a significant role in explaining differences in the results

an analysis of the optimum renewable energy portfolio using the bottom up model focusing on the electricity generation sector in south korea abstract the deployment of renewable energy is considered as one of the important alternative solutions for reducing greenhouse gas emissions caused by electricity generation as one of the key measures for promoting the deployment of renewable energy the renewable portfolio standard rps which obligates power operators with a power equipment capacity of 500 mw or larger excluding renewable energy equipment to supply over a specific portion of their total electricity generation output in the form of renewable energy was enacted in south korea in 2012 however there are still many disputes concerning the appropriate renewable energy deployment goal and the optimum portfolio for each renewable energy source which enable to minimize the economic burden while achieving the deployment target therefore this paper intends to deduce the optimum portfolio up to 2050 based on explicit representation of renewable energy technologies and analyze the cost effect using the bottom up energy system analysis model of electricity generation sector in south korea the result indicates that the potential for a reduction of the cost of pv was the highest and that in the long term it would account for the highest portion of the renewable energy portfolio as it was the most cost competitive technology the additional cost for increasing the renewable deployment target 20 compared with the 3rd energy basic plan was predicted to be between 107 and 115 usd mw h therefore the renewable energy will be able to play a greater role in reducing ghg emission if the r d to reduce investment and operation cost of pv and wind power is conducted successfully

can falling supply explain the rising return to college for younger men a cohort based analysis although the college high school wage gap for younger u s men has doubled over the past 30 years the gap for older men has remained nearly constant in the united kingdom and canada the college high school wage gap also increased for younger relative to older men using a model with imperfect substitution between similarly educated workers in different age groups we argue that these shifts reflect changes in the relative supply of highly educated workers across age groups the driving force behind these changes is the slowdown in the rate of growth of educational attainment that began with cohorts born in the early 1950s in all three countries

the value of value pricing of roads second best pricing and product differentiation abstract some road pricing demonstrations use value pricing in which travelers can choose between a free but congested roadway and a priced roadway recent research has uncovered a potentially serious problem for such demonstrations second best tolls may be far lower than those typically charged and from a welfare perspective the latter may be worse than not pricing at all that research however assumes that all travelers are identical and it therefore neglects the benefits of product differentiation using a model with two user groups we find that accounting for heterogeneity in value of time is important in evaluating constrained policies and improves the relative performance of policies that offer differential prices

out of school and out of work youth in latin america a persistent problem in a decade of prosperity this paper explores the persistent shares of youth that are out of school and out of work in latin america with special attention to those in the fifteen to eighteen age range according to our calculations 18 5 percent of latin american youth in this age group 9 4 million individuals are currently neither in school nor working we present the patterns of the evolution of this group in eighteen countries across the region identifying the set of microeconomic and aggregate variables that are correlated with their dynamics we explore the relationship with the household s socioeconomic characteristics and with the structure and evolution of labor markets we identify the links with the schooling system and school dropout patterns and we verify whether the group responds to changes in the environment including overall gdp growth or to economic shocks we also explore the possibility that they are simply a transient demographic phenomenon

skill biased technological change and rising wage inequality some problems and puzzles the recent rise in wage inequality is usually attributed to skill biased technical change sbtc associated with new computer technologies we review the evidence for this hypothesis focusing on the implications of sbtc for overall wage inequality and for changes in wage differentials between groups a key problem for the sbtc hypothesis is that wage inequality stabilized in the 1990s despite continuing advances in computer technology sbtc also fails to explain the evolution of other dimensions of wage inequality including the gender and racial wage gaps and the age gradient in the return to education

changes in returns to education in latin america the role of demand and supply of skills using micro data for the urban areas of argentina brazil chile colombia and mexico the authors document trends in men s returns to education during the 1980s and the 1990s and estimate the role of supply and demand factors in explaining the changes in skill premia they propose a model of demand for skills with three production inputs corresponding to workers with primary secondary and university level education further the authors demonstrate that an unprecedented rise in the supply of workers having completed secondary level education depressed their wages relative to workers with primary level education throughout latin america this supply shift was compounded by a generalized shift in the demand for workers with tertiary education

impact of international climate policies on co2 capture and storage deployment illustrated in the dutch energy system a greenhouse gas emission trading system is considered an important policy measure for the deployment of ccs at large scale however more insights are needed whether such a trading system leads to a sufficient high co2 price and stable investment environment for ccs deployment to gain more insights we combined worldscan an applied general equilibrium model for global policy analysis and markal nl uu a techno economic energy bottom up model of the dutch power generation sector and co2 intensive industry worldscan results show that in 2020 co2 prices may vary between 20 tco2 in a grand coalition scenario in which all countries accept greenhouse gas targets from 2020 to 47 tco2 in an impasse scenario in which eu 27 continues its one sided emission trading system without the possibility to use the clean development mechanism markal nl uu model results show that an emission trading system in combination with uncertainty does not advance the application of ccs in an early stage the rates at which different co2 abatement technologies including ccs develop are less crucial for introduction of ccs than the co2 price development and the combination of biomass co firing and ccs seems an important option to realise deep co2 emission reductions

regional labor markets and the determinants of wage inequality from 1972 to 1990 the united states experienced the largest increase in wage inequality of any developed country the spread in log wages between the 90th and 10th percentiles of the male wage distribution increased by about 60 points and inequality increased within virtually every demographic or skill category of the labor force see chinhui juhn et al 1993 various explanations have been offered including changes in the relative demand for skill intensive goods international trade immigration of less skilled workers and increased labor force participation of women yet attempts to quantify the relative importance of these factors have not met with much success this leaves skill biased technical change as the residual claimant that rationalizes the data this paper uses regional differences in the evolution of wage inequality to provide new evidence on the determinants of relative wages using a model of factor demand in geographic markets i isolate contributions of i changing skill ratios in the labor force ii increased participation of women iii technical change and iv changes in the industrial composition of labor demand the data indicate that changing skill ratios and women s labor supply have affected the wages of low skilled men in the west the data indicate that increased immigration of less skilled hispanic and asian workers has adversely affected the wages of natives causing a greater increase in inequality there than in any other region of the country i modeling wage inequality in regional markets

the synthesis of bottom up and top down approaches to climate policy modeling electric power technology detail in a social accounting framework abstract hybrid climate policy simulations have sought to bridge the gap between bottom up engineering and top down macroeconomic models by integrating the former s energy technology detail into the latter s macroeconomic framework construction of hybrid models is complicated by the need to numerically calibrate them to multiple incommensurate sources of economic and engineering data i develop a solution to this problem following howitt s howitt r e 1995 positive mathematical programming american journal of agricultural economics 77 329 342 positive mathematical programming approach using data for the u s i illustrate how the inputs to the electricity sector in a social accounting matrix may be allocated among discrete types of generation so as to be consistent with both technologies input shares from engineering cost estimates and the zero profit and market clearance conditions of the sector s macroeconomic production structure

energy efficiency and policy in swedish pulp and paper mills a data envelopment analysis approach the paper provides an empirical assessment of the electricity efficiency improvement potential in the swedish pulp and paper industry by employing data envelopment analysis dea and mill specific input and output data for the years 1995 2000 and 2005 the empirical results are discussed in relation to the reported outcomes of the swedish voluntary energy efficiency programme pfe the estimated electricity efficiency gap is relatively stable over the time period it equals roughly 1 twh per year for the sample mills and this is three times higher than the corresponding self reported electricity savings in pfe this result is largely a reflection of the fact that in the pulp and paper industry electricity efficiency improvements are typically embodied in the diffusion of new capital equipment and there is a risk that some of the reported measures in pfe simply constitute an inefficient speed up of capital turnover the above does not preclude though that many other measures in pfe may have addressed some relevant market failures and barriers in the energy efficiency market overall the analysis suggests that future energy efficiency programs could plausibly be better targeted at explicitly promoting technological progress as well as at addressing the most important information and behaviour related failures

alternative policy impacts on us ghg emissions and energy security a hybrid modeling approach abstract this study addresses the possible impacts of energy and climate policies namely corporate average fleet efficiency cafe standard renewable fuel standard rfs and clean energy standard ces and an economy wide equivalent carbon tax on ghg emissions in the us to the year 2045 bottom up and top down modeling approaches find widespread use in energy economic modeling and policy analysis in which they differ mainly with respect to the emphasis placed on technology of the energy system and or the comprehensiveness of endogenous market adjustments for this study we use a hybrid energy modeling approach markal macro that combines the characteristics of two divergent approaches in order to investigate and quantify the cost of climate policies for the us and an equivalent carbon tax the approach incorporates macro economic feedbacks through a single sector neoclassical growth model while maintaining sectoral and technological detail of the bottom up optimization framework with endogenous aggregated energy demand our analysis is done for two important objectives of the us energy policy ghg reduction and increased energy security our results suggest that the emission tax achieves results quite similar to the ces policy but very different results in the transportation sector the cafe standard and rfs are more expensive than a carbon tax for emission reductions however the cafe standard and rfs are much more efficient at achieving crude oil import reductions the gdp losses are 2 0 and 1 2 relative to the base case for the policy case and carbon tax that difference may be perceived as being small given the increased energy security gained from the cafe and rfs policy measures and the uncertainty inherent in this type of analysis

should i stay or should i go career choices for young workers in latin america labor market institutions shape the return to workers skills they define the incentives of firms and workers to invest in general and specific skills affecting the returns to experience and tenure this paper presents an empirical assessment of this hypothesis we take advantage of rich administrative data from brazil and chile two countries with different regulatory frameworks we focus on young workers as they face to a greater extent the trade off between accumulating general or specific skills the analysis is motivated by a simple conceptual framework from which we derive empirical predictions it takes into account the potential endogeneity of occupational choices while allowing for heterogenous returns to tenure and experience we find positive average returns to both dimensions in both countries with larger returns to tenure in brazil and larger returns to experience in chile this is consistent with the original conjecture as the more rigid labor market legislation in brazil encourages firms to carry out additional investments in young workers s specific skills chile s institutions on the contrary promote the acquisition of general skills we further examine how these returns differ by educational attainment an important policy consideration in the region and find that more educated workers in both countries face larger returns to experience and tenure relative to their less educated counterparts

the polarization of the u s labor market this paper analyzes a marked change in the evolution of the u s wage structure over the past fifteen years divergent trends in upper tail 90 50 and lower tail 50 10 wage inequality we document that wage inequality in the top half of distribution has displayed an unchecked and rather smooth secular rise for the last 25 years since 1980 wage inequality in the bottom half of the distribution also grew rapidly from 1979 to 1987 but it has ceased growing and for some measures actually narrowed since the late 1980s furthermore we find that occupational employment growth shifted from monotonically increasing in wages education in the 1980s to a pattern of more rapid growth in jobs at the top and bottom relative to the middles of the wage education distribution in the 1990s we characterize these patterns as the u201cpolarization u201d of the u s labor market with employment polarizing into high wage and low wage jobs at the expense of middle wage work we show how a model of computerization in which computers most strongly complement the non routine abstract cognitive tasks of high wage jobs directly substitute for the routine tasks found in many traditional middle wage jobs and may have little direct impact on non routine manual tasks in relatively low wage jobs can help explain the observed polarization of the u s labor market this abstract was borrowed from another version of this item

skill premium labor supply and changes in the structure of wages in latin america earnings inequality declined rapidly in argentina brazil and chile during the 2000s a reduction in the experience premium is a fundamental driver of declines in upper tail 90 50 inequality while a decline in the education premium is the primary determinant of the evolution of lower tail 50 10 inequality relative labor supply is important for explaining changes in the skill premiums relative demand trends favored high skilled workers during the 1990s shifting in favor of low skilled workers during the 2000s changes in the minimum wage and more importantly commodity led terms of trade improvements are key factors behind these relative skill demand trends

europe s climate goals and the electricity sector abstract eu s objective of attaining 20 reductions in greenhouse gas emissions by 2020 is analysed with a general equilibrium model detailing electricity generation technologies and capital vintaging consistent with theory and other analysts we find that the nonuniform treatment of emitting sectors in eu raises abatement costs by a factor of two to three under cost effective emission reductions a more comprehensive tradable cap electricity generation abates more than its proportional share in emissions the european economy abates by substitution towards natural gas by energy efficiency improvements and by reductions in emission intensive manufactures applied policies such as renewable support and responses such as carbon leakage hold down the prices for emission and electricity thus also holds down incentives for energy efficiency and technological change this leads to little preparation for the future and global mitigation

a new data set measuring income inequality this article presents a new data set on inequality in the distribution of income the authors explain the criteria they applied in selecting data on gini coefficients and on individual quintile groups income shares comparison of the new data set with existing compilations reveals that the data assembled here represent an improvement in quality and a significant expansion in coverage although differences in the definition of the underlying data might still affect inter temporal and international comparability based on this new data set the authors do not find a systematic link between growth and changes in aggregate inequality they do find a strong positive relationship between growth and reduction of poverty

evaluating a simple method for estimating black white gaps in median wages racial differences in wage rates are important measures of economic inequality among races because for almost all individuals labor income constitutes the most important component of lifetime income as a consequence the prices at which individuals may sell their time provide vital infornation about the distribution of welfare and economic success however we only observe prices when market transactions occur and thus we only observe wage rates for individuals who are employed since the wages of employed workers are not randomly sampled from the distribution of potential wages it is difficult to draw inferences concerning racial gaps in potential wages from data on observed wage rates richard butler and james heckman 1977 raised this issue in the context of assessing the impact of government policies on racial income inequality charles brown 1984 james smith and finis welch 1989 and amitabh chandra 2000 also examine the extent of racial differences in participation rates and the impact of these differences on measures of racial wage and income gaps this topic remains salient in part because employment rates among working age black males remain significantly below corresponding rates for whites neal and johnson 1996 estimated racial gaps in median wages among men by imputing wages of zero for all men in a particular crosssection who report that they have not worked at all during the survey period under a specific assumption concerning the distribution of missing wages this procedure yields consistent estimates of the black white gap in median wages conditional on observed characteristics below we spell out this assumption and use panel data to investigate the extent to which it may be violated in cross section wage analyses our results suggest that imputing wages of zero for unemployed individuals may provide a reasonable way to estimate median wage regressions among men

motorization in developing countries causes consequences and effectiveness of policy options abstract this paper examines the rise in car use and decline in bus use in developing countries using a theoretical mode choice model and numerical simulations the empirical literature points to rising per capita income as a primary determinant of rising motor vehicle use known as motorization this analysis of commuter car bus mode choice shows that in addition to rising income other factors may drive rising car use at the urban level first greater income inequality increases car use if car use is still low and reduces car use if it is already high second traffic congestion hinders buses more than cars causing positive feedback between car use and travel time that reduces bus use and contributes to its abrupt collapse third policy interventions to reduce congestion in urban areas such as tolling car use and reserving lanes for buses increase consumer surplus by maintaining bus service as an alternate travel mode even as incomes rise socially optimal reserved bus lanes may achieve most of the gains from a socially optimal toll on car use

the impact of an ets on the australian energy sector an integrated cge and electricity modelling approach this paper utilises a new computable general equilibrium cge model which integrates an electricity supply model to gauge the effects of a national emissions trading scheme ets on the australian energy sector and the broader economy the modelling results show that an ets can reduce emissions effectively and with a relatively small impact on the overall economy but the impact of the ets on individual sectors varies wind electricity generation is projected to benefit greatly brown coal electricity and gas electricity are expected to be adversely affected substantially somewhat surprisingly the impact on black coal electricity is negative but relatively small

latin america s social policy challenge education social insurance redistribution abstract long regarded as a region beset by macroeconomic instability high inflation and excessive poverty and inequality latin america has undergone a major transformation over the last 20 years the region has seen improved macroeconomic management and substantial and sustained reductions in poverty and inequality in this paper we argue that social policy including human capital and education social insurance and redistribution need special attention if achievements of the last two decades are to be sustained and amplified starting in the mid 1990s many governments in the region introduced a variety of programs including noncontributory pensions and health insurance and cash transfers targeted to the poor social spending in latin america increased sharply these policies have been widely praised and we believe they have resulted in substantial improvements in the lives of the poor in the region however a more nuanced view shows some worrisome trends moving forward we believe it is nec

true world income distribution 1988 and 1993 first calculation based on household surveys alone the paper derives world income or expenditure distribution of individuals for two years 1988 and 1993 it is the first paper to calculate world distribution for individuals based entirely on household survey data from 91 countries and adjusted for differences in purchasing power parity between the countries measured by the gini index inequality increased from an already very high 63 in 1988 to 66 in 1993 the increase was driven more by rising differences in mean incomes between the countries than by rising inequalities within countries the most important contributors were rising urban rural differences in china and slow growth of rural incomes in south asia compared to several large developed market economies

wage dynamics and inequality in the brazilian formal labor market abstract this paper investigates the decrease in wage inequality among working age men in the brazilian formal labor market by decomposing it into its permanent and transitory components the permanent component refers to workers productivity characteristics such as education and abilities whereas the transitory component relates to noise caused by economic instability we use data from the annual reports of social information rais from 1994 to 2016 covering periods of both economic instability and stability our proposed model includes year and cohort specific effects in both components and we use minimum distance methods to estimate our parameters of interest overall we observe a downward trend in wage inequality levels for most cohorts during the entire period however different sources are associated with this decrease in different sub periods this decline can be attributed to reductions in the transitory component from 1994 to 2005 related to the economic stabilization process and in the permanent component from 2010 to 2016 moreover our results suggest that the permanent component has an important role in explaining the wage inequality level in brazil especially considering older cohorts even though its share in terms of total variance has decreased over the 2010s finally we show that age and education are accountable for a great share of permanent inequality with this percentage being even greater for younger cohorts although their relative importance also decreased over the years

double dividend analysis with screen an empirical study for switzerland this paper presents an empirical study that quantifies the effects of an ecological fiscal reform as recently rejected by the swiss population the measure aims to encourage employment and at the same time to dissuade from an excessive energy use and thereby decrease energy induced external costs co2 etc the analysis is based on the model screen a general equilibrium model using the complementarity format for the hybrid description of economy wide production possibilities where the electricity sector is represented by a bottom up activity analysis and the other production sectors are characterised by top down production functions a dynamic formulation of the activity analysis of technologies allows for the reproduction of endogenous structural change see frei c w haldi p a sarlos g 2003 dynamic formulation of a top down and bottom up merging energy policy model energy policy 31 10 1017 1031 the labour market is formulated according to the microeconomically founded efficiency wages and calibrated for switzerland the study includes the development of a consistent set of top down bottom up and labour data for switzerland the collection of bottom up data on the electricity sector just before liberalisation was not easy the electricity sector characterising data was prepared based on original statistics about 140 swiss electricity companies

dynamic formulation of a top down and bottom up merging energy policy model abstract the impact of energy policy measures is not restricted to the energy system and should therefore be analysed within an economy wide framework while keeping the essential details of the energy sector the aim of this paper is to present new developments in the field of the consistent evaluation of indicators for the sustainability assessment of energy policy measures starting from the static concept of bohringer energy econ 20 1998 233 this paper shows how the complementarity format can be used in computable general equilibrium cge modelling for a dynamic formulation of bottom up and top down approach merging models while a hybrid approach increases the credibility of cge models in energy policy analysis by replacing the energy sector generic functional forms with a bottom up activity analysis based on specific technologies the endogenous formulation of investment decisions makes an explicit description of evolving specific capital stocks and technology mixes possible both features are essential when assessing effects of policy measures that may be affected by structural change which is typically the case in the long term assessment of energy policy measures

the synthesis of bottom up and top down approaches to climate policy modeling electric power technologies and the cost of limiting us co2 emissions abstract in the us the bulk of co 2 abatement induced by carbon taxes comes from electric power this paper incorporates technology detail into the electricity sector of a computable general equilibrium model of the us economy to characterize electric power s technological margins of adjustment to carbon taxes and to elucidate their general equilibrium effects compared to the top down production function representation of the electricity sector the technology rich hybrid specification produces less abatement at a higher welfare cost suggesting that bottom up models do not necessarily generate lower costs of abatement than top down models this result is shown to be sensitive to the elasticity with which technologies generating capacities adjust to relative prices

skill biased technology transfer around the world in this paper we consider the extent to which skill biased technological changes are transferring across international borders thereby altering the skill structure of labour markets evidence of increased relative demand for skilled workers is uncovered in the manufacturing sectors of 37 high middle and low income countries skill biased technology transfer is central to the increased demand for skilled workers in middle income countries in low income countries there is less evidence of such a mechanism operating

assessment of china s climate commitment and non fossil energy plan towards 2020 using hybrid aim cge model china made a commitment in copenhagen to reduce its carbon dioxide emissions per unit of gdp from 40 to 45 compared with the 2005 level by 2020 and is determined to vigorously develop non fossil fuels this study analyzes the effects and impacts of policies that could help to achieve china s copenhagen commitments with a hybrid static cge model in which the electricity sector is disaggregated into 12 generation technologies four scenarios are developed including the reference scenario a the reference scenario b and two carbon constraint scenarios the results show that carbon intensity in terms of gdp will fall by 30 97 between 2005 and 2020 in the reference scenario a and will be reduced further by 7 97 if china s targeted non fossil energy development plans can be achieved in the reference scenario b however the rest of the 40 45 target must be realized by other measures such as carbon constraint it is also observed that due to carbon intensity constraints gdp loss would be from 0 032 to 0 24 compared to the reference scenario b and co2 emission reductions are due mainly to decreases in coal consumption in the electricity sector and manufacturing sector

a picture of wage inequality and the allocation of labor through a period of trade liberalization the case of brazil this paper constructs a picture of the labor market impact of trade liberalization in brazil we examine the level and dispersion of wages the skilled wage premium and employment composition before and after trade liberalization after trade reform there was a rise in the returns to college education which since the share of college workers also rose is attributable to rising demand this change did not increase overall wage dispersion because of the small share of college educated workers and because of decreasing returns to intermediate levels of education

energy environment policy modeling of endogenous technological change with personal vehicles combining top down and bottom up methods abstract the transportation sector offers substantial potential for greenhouse gas ghg emission abatement but widely divergent cost estimates complicate policy making energy economy policy modelers apply top down and bottom up cost definitions and different assumptions about future technologies and the preferences of firms and households our hybrid energy economy policy model is technology rich like a bottom up model but has empirically estimated behavioral parameters for risk and technology preferences like a top down model unlike typical top down models however it simulates technological change endogenously with functions that relate the financial costs of technologies to cumulative production and adjust technology preferences as market shares change we apply it to the choice of personal vehicles to indicate first the effect on cost estimates of divergent cost definitions and second the possible response to policies that require a minimum market share for low emission vehicles

economic policy changes and wage differentials in latin america abstract this article presents estimates of the impact of changes in liberalization policies on wage differentials by schooling level using a new high quality data set for 18 latin american countries for 1977 98 the method controls for all fixed and time varying country characteristics some of which may affect the policies themselves the results indicate that liberalizing policy changes overall have had a short run disequalizing effect of expanding wage differentials although this effect tends to fade away over time this disequalizing effect is due to the strong impact of domestic financial market reform capital account liberalization and tax reform however privatization contributed to narrowing wage differentials and increasing trade openness had no significant effect on wage differentials technological progress rather than trade flows appears to be a channel through which policy changes are affecting inequality

the cost of reducing co2 emissions integrating abatement technologies into economic modeling we explore two methods of incorporating bottom up abatement cost estimates into top down modeling an economy wide method and a sector specific method carbon emissions generally depend on technology and scale given the technology options abatement is possible without a substantial reduction in scale otherwise the change must come purely through a reduction in demand our analysis shows that the cost of environmental policy is considerably overestimated by top down models if a bottom up abatement cost curve is not included using the data for the swiss economy we demonstrate two techniques of representing an abatement function explicitly in a computable general equilibrium model a traditional and a hybrid discrete technology modeling approach the results suggest that the current climate policy in switzerland will not be able to move the economy towards the required 10 co2 reduction both approaches provide virtually the same results when the calibration process is precisely executed which contradicts the results of previous studies

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