Commuting in small towns in rural areas: the case of St Andrews.

Since many rural commuters depend on the private car due to lack of convenient public transport, car reduction policies designed for large cities with ample public transport may be unsuitable for smaller towns. In particular, pricing policies designed to encourage public transport use may be less effective, as commuters with no convenient substitute to driving will be unable to switch. This paper develops multinomial and mixed logit models of commuters’ mode choice using data from a survey of commuters in the University of St Andrews. We find that the direct elasticities of the car mode are comparable to estimates reported in studies of commuting in larger urban areas, while the demand for public transport is considerably more elastic. The value of in-vehicle time is found to be about half of the UK average, reflecting that the roads in the St Andrews area are relatively uncongested.Mode choice, Rural commuting, Discrete choice models

Value of work: bargaining, job-satisfaction, and taxation in a simple GE model

Job-satisfaction as a component of workers' utility has been strangely neglected, with work usually regarded as reducing utility and the benefits of leisure. This is contradicted by many empirical studies showing that unemployment is a major cause of unhappiness, even when income is controlled for. Here we develop a simple model where job-satisfaction is non-contractible but can be included in extended collective bargaining when workers participate in management, but employment is still chosen to maximise profit. Including taxation to fund unemployment benefits and public goods, we show that switching from traditional bargaining over wages to extended (but still second-best) bargaining can generate a Pareto welfare improvement

Are two tax rates better than one?

Should two-band income taxes be progressive given a general income distribution? We provide a negative answer under utilitarian and max-min welfare functions. While this result clarifies some ambiguities in the literature, it does not rule out progressive taxes in general. If we maximize total or weighted utility of the poor, as often intended by the society, progressive taxes can be justified, especially when the 'rich' are very rich. Under these objectives we obtain necessary conditions for progressive taxes, which only depend on aggregate features of income distributions. The validity of these conditions is examined using plausible income distributions

Tax reform and redistribution for a better recovery

A regressive tax system and welfare cuts under ideological austerity have generated growing poverty and inequality in the UK and US. Failures in responding to the Covid-19 pandemic and the resulting deep recession have the greatest impact on the poorest and most vulnerable, exacerbating poverty and inequality. In contrast to this depressing history, we show in detail that a better recovery in the UK requires a radical tax reform and a universal basic income, combined with a green new deal for full employment and a low-carbon economy, employee self-determination and economic democracy to eliminate exploitation and establish social justice.PostprintPeer reviewe

Economic democracy: we must restructure the economy, not return it to its pre-COVID-19 state

Felix FitzRoy and David Spencer highlight some fundamental problems of UK economic policy, as exposed and exacerbated by the lockdown. They write that, alongside the temporary emergency measures adopted, there is an urgent need for wider reforms, based on the goal of promoting economic democracy

Employee participation, job quality, and inequality

PurposeThe purpose is to review the effects of employee participation (EP) in decision-making, ownership and profit on job quality, worker well-being and productivity, and derive policy recommendations from the findings.Design/methodology/approachThe authors summarise results of “declining labour power”, plus theoretical arguments and empirical evidence for the benefits of EP for job quality, satisfaction and productivity.FindingsWorker well-being and job satisfaction are ignored unless they contribute directly to profitability. EP is needed to remedy this situation when employers have market power and unions are weak. The result can be a rise in both productivity and well-being.Research limitations/implicationsThe chief issue here is that there are data limitations, particularly on the well-being effects of participation.Practical implicationsLots of encouraging examples in many countries need legislative help to multiply.Social implicationsIt is quite possible that there could be major implications for welfare and employment.Originality/valueThe authors make the case for public sector subsidies for employee buyouts and new cooperative start-ups, as well as legislation for works councils and profit sharing

Income Status and Life Satisfaction

The importance of both income rank and relative income, as indicators of status, has long been recognised in the literature on life satisfaction and happiness. Recently, several authors have made explicit comparisons of the relative importance of these two measures of income status, and concluded that rank dominates to the extent that reference income becomes insignificant in regressions including both these explanatory variables, and that even absolute or household income, otherwise always positively related to happiness, may lose statistical significance. Here we test this hypothesis with a large UK panel (British Household Panel Survey and Understanding Society) for 1996–2017, split by age and retirement status, and find, contrary to previous results, that rank, household income and reference income are all usually important explanatory variables, but with significant differences between subgroups. This finding holds when rank is in its often-used relative form, and also with absolute rank

Education, income and happiness: Panel evidence for the UK

Using panel data from the BHPS and its Understanding Society extension, we study life satisfaction (LS) and income over nearly two decades, for samples split by education, and age, to our knowledge for the first time. The highly educated went from lowest to highest LS, though their average income was always higher. In spite of rapid income growth up to 2008/2009, the less educated showed no rise in LS, while highly educated LS rose after the crash despite declining real income. In panel LS regressions with individual fixed effects, none of the income variables was significant for the highly educated

Higher tax for top earners

The literature can justify both increasing and decreasing marginal taxes (IMT & DMT) on top incomes under different welfare objectives and income distributions. Even when DMT are theoretically optimal, they are often politically infeasible. Then a flat tax seems to be a constrained optimal solution. We show however that, given any flat tax we can increase the total utility of a poor majority by raising the top income tax rate under a simple condition, which can be checked with empirical data. We further generalize our main results allowing different welfare weights, declining elasticity of labor supply and more tax bands.Publisher PDFPeer reviewe

Foundations of Political Economy

In This essay we are primarily concerned with the organisation of work in the basic »working unit« of the economy, the firm. First, we trace the development of various important relevant ideas through classical writings and their successors up to some notable recent contributions. We also, argue that the main stream of political economy has indeed to focus on irrelevant problems, due to the misunderstanding or simply lack of economic theory. We note a beginning change of orientation in political economy and we attempt to provide some rigorous foundation, on the basis of modern economic theory, of an adequate political economy of the firm. We also enter the extensive modern debate on the positive economics of the firm. We offer a new synthesis of the main conflicting schools, and use this as a foundation for our normative political economics of the firm and work organisation