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

Bruno De Borger and Bart Wuyts

Working Papers from University of Antwerp, Faculty of Business and Economics

Abstract: 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.

Keywords: Congestion taxes; Competitive labour markets; Wage bargaining; Telecommuting (search for similar items in EconPapers)
JEL-codes: D62 H21 R41 (search for similar items in EconPapers)
Pages: 40 pages
Date: 2010-06
New Economics Papers: this item is included in nep-cmp, nep-lab and nep-ure
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Related works:
Journal Article: The structure of the labor market, telecommuting, and optimal peak period congestion tolls: A numerical optimization model (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:ant:wpaper:2010013

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