The purpose of this study is to estimate the intertemporal income elasticity of the value of travel time (VTT) and test whether it differs from one. The empirical analysis is performed on Swedish revealed preference data, where voluntary job changers' individual wage premium for commuting time changes is used as an estimate of VTT. The panel structure of the data implies the opportunity to use a lagged net income variable on individual level to estimate the income elasticity in an intertemporal way. The result does not support an intertemporal income elasticity of VTT that is different from one and this result is robust over several different empirical specifications. Hence, the policy implication of this study is in contrast to a recent recommendation by an EU-financed project, Heatco, which propose an intertemporal income elasticity of 0.7.
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Paper provided by Swedish National Road & Transport Research Institute (VTI) in its series Working Papers with number
2008:3.
Length: 38 pages Date of creation: 28 Apr 2008 Date of revision: Handle: RePEc:hhs:vtiwps:2008_003
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Find related papers by JEL classification: C20 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - General C81 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Microeconomic Data R41 - Urban, Rural, and Regional Economics - - Transportation Systems - - - Transportation: Demand, Supply, and Congestion
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