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| Parry, Ian W.H.; Bento, Antonio M.. |
| This paper explores the interactions between taxes on work-related traffic congestion and pre-existing distortionary taxes in the labor market. A congestion tax raises the overall costs of commuting to work and discourages labor force participation at the margin, when revenues are returned in lump-sum transfers. We find that the resulting efficiency loss in the labor market can be larger than the Pigouvian efficiency gains from internalizing the congestion externality. In contrast, if congestion tax revenues are used to reduce labor taxes the net impact on labor supply is positive, and the efficiency gain in the labor market can raise the overall welfare gains of the congestion tax by as much as 100 percent. Recycling congestion tax revenues in public... |
| Tipo: Working or Discussion Paper |
Palavras-chave: Externalities; Congestion taxes; Pre-existing tax distortions; General equilibrium; Welfare effects; Public Economics; R41; H21; H23. |
| Ano: 1999 |
URL: http://purl.umn.edu/10548 |
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| Parry, Ian W.H.. |
| This paper uses a numerical general equilibrium model to examine the quantitative importance of pre-existing factor tax distortions for the welfare effects of restrictive trade policies in economies with and without market power in trade. We analyze tariffs, nonauctioned import quotas (with rents accruing to domestic firms) and voluntary export restraints (with rents accruing to foreign firms). We find that allowing for interactions with pre-existing taxes can greatly magnify the overall costs of these policies, f{fn possibly by over several hundred percent! In the case of import tariffs, much of this additional cost can be offset if the tariff revenues are used to reduce other distortionary taxes. Indeed the cost discrepancy between revenue-neutral... |
| Tipo: Working or Discussion Paper |
Palavras-chave: Pre-existing tax distortions; Tariffs; Import quotas; Second-best welfare costs; International Relations/Trade; F10; H21. |
| Ano: 1998 |
URL: http://purl.umn.edu/10563 |
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