A Distortive Wage Tax and a Countervailing Commuting Subsidy
Matthias Wrede ()
Journal of Public Economic Theory, 2009, vol. 11, issue 2, pages 297-310
Within a second-best duocentric urban economics framework where labor income taxation distorts workplace choices on account of commuting costs, this paper studies a commuting subsidy, which distorts land use. It is shown that a commuting subsidy increases welfare if and only if it shifts labor supply from less to more productive business districts. Copyright © 2009 Wiley Periodicals, Inc..
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