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Distributional Effects of Public Transport Subsidies

Author

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  • Börjesson, Maria

    (CTS - Centre for Transport Studies Stockholm (KTH and VTI))

  • Eliasson, Jonas

    (Stockholm City Transport Administration)

  • Rubensson, Isak

    (KTH and Stockholm Public Transport Agency)

Abstract

We analyse the distribution of transit subsidies across population groups in Stockholm. We develop a novel methodology that takes into account that the subsidy per passenger varies across transit links, since production costs and load factors vary. With this, we calculate the subsidy per trip in the transit network and analyse the distribution of subsidies across population groups. The average subsidy rate in Stockholm is 44%, but the variation across trips turns out to be large: while 34% of the trips are not subsidized at all but generates a profit, 16% of the trips have a subsidy rate higher than 2/3. We calculate the concentration index to explore the distribution of subsidies across income groups. The average subsidy per person is similar for all income groups, except for the top income quintile. This holds not only for the current flat-fare system, but also for distance-based fares and fares with a constant subsidy rate. Transit subsidies is hence not effective as a redistribution policy in Stockholm. The largest systematic variation we find is across residential areas: the average subsidy per person is five times higher in the peripheral areas of the region compared to the regional core, and the subsidy per trip is ten times higher.

Suggested Citation

  • Börjesson, Maria & Eliasson, Jonas & Rubensson, Isak, 2018. "Distributional Effects of Public Transport Subsidies," Working papers in Transport Economics 2018:17, CTS - Centre for Transport Studies Stockholm (KTH and VTI).
    • Handle: RePEc:hhs:ctswps:2018_017
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    4. Tovar Reanos, Miguel, 2020. "Car ownership and the distributional and environmental policies to reduce driving behavior," Papers WP673, Economic and Social Research Institute (ESRI).
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    More about this item

    Keywords

    Public Transport; Subsidies; Equity; Progressive; Distribution effect; Concentration index;
    All these keywords.

    JEL classification:

    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • R41 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Transportation: Demand, Supply, and Congestion; Travel Time; Safety and Accidents; Transportation Noise
    • R42 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Government and Private Investment Analysis; Road Maintenance; Transportation Planning

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