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Affordability and subsidies in public urban transport : what do we mean, what can be done?

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  • Estupinan, Nicolas
  • Gomez-Lobo, Andres
  • Munoz-Raskin, Ramon
  • Serebrisky,Tomas

Abstract

Subsidy policies on public urban transport have been adopted ubiquitously. In both developed and developing countries, subsidies are implemented to make transport more affordable. Despite their widespread implementation, there are virtually no quantitative assessments of their distributional incidence, making it impossible to determine if these instruments are pro-poor. This paper reviews the arguments used to justify subsidy policies in public urban transport. Using different tools to quantitatively evaluate the incidence and distributive impacts of subsidy policy options, the paper analyzes the findings of a series of researchpapers that study urban public transport subsidy policies in developed and developing countries. The available evidence indicates that current public urban transport subsidy policies do not make the poorest better off. Supply-side subsidies are, for the most part, neutral or regressive; while demand-side subsidies perform better-although many of them do not improve income distribution. Considering that the policy objective is to improve the welfare of the poorest, it is imperative to move away from supply-side subsidies towards demand-side subsidies and to integrate transport social concerns into wider poverty alleviation efforts, which include the possibility of channeling subsidies through monetary transfer systems or through other transfer instruments (food subsidies, health services and education for the poor). The general conclusion of the paper is that more effort should be devoted to improve the targeting properties of public urban transport subsidies using means-testing procedures to ensure a more pro-poor incidence of subsidies.

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Bibliographic Info

Paper provided by The World Bank in its series Policy Research Working Paper Series with number 4440.

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Date of creation: 01 Dec 2007
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Handle: RePEc:wbk:wbrwps:4440

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Keywords: Transport Economics Policy&Planning; Transport in Urban Areas; Urban Transport; Taxation&Subsidies; Economic Theory&Research;

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Cited by:
  1. Drevs, Florian & Tscheulin, Dieter K. & Lindenmeier, Jörg & Renner, Simone, 2014. "Crowding-in or crowding out: An empirical analysis on the effect of subsidies on individual willingness-to-pay for public transportation," Transportation Research Part A: Policy and Practice, Elsevier, vol. 59(C), pages 250-261.
  2. Munoz-Raskin, Ramon, 2010. "Walking accessibility to bus rapid transit: Does it affect property values? The case of Bogotá, Colombia," Transport Policy, Elsevier, vol. 17(2), pages 72-84, March.
  3. Russo, Antonio, 2012. "Pricing of Transport Networks, Redistribution and Optimal Taxation," TSE Working Papers 12-353, Toulouse School of Economics (TSE).
  4. Zegras, Christopher & Nelson, Joshua & Macário, Rosário & Grillo, Christopher, 2013. "Fiscal federalism and prospects for metropolitan transportation authorities in Portugal," Transport Policy, Elsevier, vol. 29(C), pages 1-12.
  5. Georgina Santos & Thomas von Brunn, 2011. "Factors influencing modal split of commuting journeys in 34 medium-sized European cities," ERSA conference papers ersa11p1019, European Regional Science Association.
  6. Asensio, Javier & Gómez-Lobo, Andrés & Matas, Anna, 2014. "How effective are policies to reduce gasoline consumption? Evaluating a set of measures in Spain," Energy Economics, Elsevier, vol. 42(C), pages 34-42.
  7. Gerlinde Verbist & Michael Föster & Vaalavou, M., 2013. "GINI DP 74: The Impact of Publicly Provided Services on the Distribution of Resources: Review of New Results and Methods," GINI Discussion Papers 74, AIAS, Amsterdam Institute for Advanced Labour Studies.

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