Labour market effects in assessing the costs and benefits of road pricing

Traffic congestion and the policies used to combat it have been studied extensively. One area which has received less attention is the secondary impacts of such policies. This paper uses a micro-simulation framework to study the effect on labour markets of road pricing. The key benefit of our chosen methodology is that it allows a simultaneous consideration of both commuting and migration decisions. We show that while welfare gains can be achieved through optimal charging, this may come at the price of decreased integration. This may manifest through either greater centralisation tendencies in population, or through unemployment disparities between regions.

► We use a model accounting for simultaneous commuting and migration to study congestion.
► Seemingly optimal road pricing can be sub-optimal due to its effect on regional disparities.
► Regional disparities may emerge in the form of population or unemployment disparities.
► The choice of financing mechanism for new infrastructure has an effect on regional development.