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Is the intertemporal income elasticity of the value of travel time unity?

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    Abstract

    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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    File URL: http://www.transportportal.se/SWoPEc/Elasticity_swardh.pdf
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    Bibliographic Info

    Paper provided by Swedish National Road & Transport Research Institute (VTI) in its series Working Papers with number 2008:3.

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    Length: 38 pages
    Date of creation: 28 Apr 2008
    Date of revision:
    Handle: RePEc:hhs:vtiwps:2008_003

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    Postal: VTI, Transport Economics, P.O. Box 6056, SE-171 06 Solna, Sweden
    Phone: +46-13-20 40 00
    Fax: +46-13-14 14 36
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    Web page: http://www.vti.se/tek
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    Related research

    Keywords: Value of travel time; Value of travel time savings; VTTS; Intertemporal; Income elasticity; Revealed preferences;

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    References

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    1. Mogens Fosgerau, 2005. "Unit income elasticity of the value of travel time savings," Urban/Regional 0508007, EconWPA.
    2. Hensher, David A. & Goodwin, Phil, 2004. "Using values of travel time savings for toll roads: avoiding some common errors," Transport Policy, Elsevier, vol. 11(2), pages 171-181, April.
    3. Cantillo, Víctor & Heydecker, Benjamin & de Dios Ortúzar, Juan, 2006. "A discrete choice model incorporating thresholds for perception in attribute values," Transportation Research Part B: Methodological, Elsevier, vol. 40(9), pages 807-825, November.
    4. Wardman, Mark, 2004. "Public transport values of time," Transport Policy, Elsevier, vol. 11(4), pages 363-377, October.
    5. Vredin Johansson, Maria & Heldt, Tobias & Johansson, Per, 2006. "The effects of attitudes and personality traits on mode choice," Transportation Research Part A: Policy and Practice, Elsevier, vol. 40(6), pages 507-525, July.
    6. Fosgerau, Mogens, 2006. "Investigating the distribution of the value of travel time savings," Transportation Research Part B: Methodological, Elsevier, vol. 40(8), pages 688-707, September.
    7. Isacsson, Gunnar & Swärdh, Jan-Erik, 2007. "An empirical on-the-job search model with preferences for relative earnings: How high is the value of commuting time?," Working Papers 2007:12, Swedish National Road & Transport Research Institute (VTI).
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