No more free parking for civic staff - Gulf News
My analysis:
There's no such thing as a free lunch. The Dubai municipality was providing an employee benefit that was costing Dubai money. Now they have taken that benefit away.
Naturally, the employees are crying foul because they have lost a valuable benefit. But do they value the benefit as much as it cost the municipality to provide? Well, they say they're not willing to pay for it themselves, so we have some indication that they do not.
Changing themes for a moment, note that some employees retain the benefit. The employees who lost the benefit are in female dominated occupations. (This is ironic in a country where it is unthinkable for many nationals that a female relative would ride unaccompanied on public transportation.) The municipality is discriminating against women. The women argue that all occupations should be treated the same.
The women also argue that their pay should be increased by the amount necessary to rent a parking space. The government says that would defeat the purpose of taking away free parking: to discourage people from driving to work. Dubai has a severe traffic congestion problem.
For homework: If the women get the pay raise they want, will all of them spend it on a parking space? (Hint: Think Slutsky versus Hicksian compensation.)
My analysis:
There's no such thing as a free lunch. The Dubai municipality was providing an employee benefit that was costing Dubai money. Now they have taken that benefit away.
Naturally, the employees are crying foul because they have lost a valuable benefit. But do they value the benefit as much as it cost the municipality to provide? Well, they say they're not willing to pay for it themselves, so we have some indication that they do not.
Changing themes for a moment, note that some employees retain the benefit. The employees who lost the benefit are in female dominated occupations. (This is ironic in a country where it is unthinkable for many nationals that a female relative would ride unaccompanied on public transportation.) The municipality is discriminating against women. The women argue that all occupations should be treated the same.
The women also argue that their pay should be increased by the amount necessary to rent a parking space. The government says that would defeat the purpose of taking away free parking: to discourage people from driving to work. Dubai has a severe traffic congestion problem.
For homework: If the women get the pay raise they want, will all of them spend it on a parking space? (Hint: Think Slutsky versus Hicksian compensation.)
posted by John B. Chilton at 3/06/2005 06:58:00 PM
2 Comments:
Taxes complicate the analysis in the frequent case that parking is a tax-free benefit in part or in whole. Even recognizing the allocative benefits of high-priced parking, if the university charges the full price and then compensates us by the same monetary amount, the gubmnt will take some of that increased income as taxes.
Dear Eclectic Econoclast,
In general, true. But in the UAE is there is no income tax.
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