Working Paper: NBER ID: w14062
Authors: Michael D. Grubb; Paul Oyer
Abstract: We use university parking permits to study how firms and employees split the value of employee benefit tax subsidies. Starting in 1998, the IRS allowed employees to pay for parking passes with pre-tax income. This subsidized the parking pass purchases of faculty and staff, but did not affect students. We show that the typical university raised its parking rates by 8-10% extra when it implemented a pre-tax payment system, but that this increase was the same for those affected by the tax change and those that were not affected. We conclude that university employees captured much of the new tax benefit, that faculty and staff that purchase permits benefited relative to those that do not purchase permits, and that students that purchase permits were made worse off relative to those that do not buy permits. We discuss what these results suggest about universities' objectives in setting their parking prices and about the demand for university parking.
Keywords: tax subsidies; employee benefits; parking permits; university pricing
JEL Codes: H25; H32; J32; K35; K49
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| IRS tax code change (H26) | university parking prices (R48) |
| pretax payment system implementation (H20) | university parking prices (R48) |
| faculty and staff permit purchases (M59) | student permit prices (Z38) |
| IRS tax code change (H26) | faculty and staff benefits (J32) |
| IRS tax code change (H26) | adverse effects on students (I24) |