Transit strike cost to outsiders
Martin Adler (VU University Amsterdam)
Field: Spatial Economics

We examine the external costs of strikes by estimating the effect of public transit disruptions on car congestion. We find that car speed decreases by 7% (3.5 km/h) during strike hours. This finding is consistent with our findings of car and bicycle travel increase of 11% and 18% during strike hours. The additional external car congestion costs are equivalent to about 30% of local transit operating cost. This cost applies mostly to regular car travelers that are outsiders in the strike negotiation between transport firms, labor unions and (local) government. Weekend, off-peak and regional bus transit strikes have no impact on travel demand and speed.

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Unilateral Climate Policies: Incentives and Effects
Karolina Ryszka (VU University Amsterdam)
Field: Environmental Economics

We analyze the effect of changes in climate policies in the framework of a two- region partial equilibrium model of resource extraction. The regions are heterogeneous in various aspects, such as their climate policies and resource extraction costs. We obtain analytical and numerical conditions for a Green Paradox to occur as a consequence of a unilateral increase in carbon taxation and backstop subsidy. In order to assess the welfare and climate consequences of unilateral policy changes, we calibrate the model distinguishing between OPEC and a ‘climate coalition’. We find that the best course of action for the largest fossil fuel using regions is to form a ‘climate coalition’ and to unilaterally introduce carbon taxation even in the absence of real climate concerns. This is due to the large gains in their terms-of-trade position vis-`a-vis OPEC.

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Friendship Ties and Labour Market Outcomes – Do Parental Networks Pay Off?
Lennart Ziegler (University of Amsterdam and VU University Amsterdam)

This paper examines intergenerational effects of social networks on the labour market. Using data on high school friendships of parents, we analyse whether the number and characteristics of friends affect labour market outcomes of their children. While many parents stay in contact with former high school connections, we find no significant impact on children’s occupational choices and prospective earnings. Robustness tests provide evidence that network endogeneity and measurement error are unlikely to cause these results. Further analysis shows that the impact on prospective earnings is somewhat higher and marginally significant at the beginning of occupational careers. Also, we find stronger effects for female friendship networks.
(joint with Bas van der Klaauw and Erik Plug)