Distributional effects of public transport subsidies: Fid-Bau Portal

Distributional effects of public transport subsidies

Börjesson, Maria / Eliasson, Jonas / Rubensson, Isak

Abstract We analyze 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 analyze 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.

Highlights • We analyze the distribution of transit subsidies across groups in Stockholm. • The average subsidy rate in Stockholm is 44%, but 34% of the trips generates a profit. • The concentration index shows that the transit subsidies are only mildly progressive. • The average subsidy per person is equal across income groups except the top quintile. • The subsidy per person is 5 times higher in the regional periphery than in the core.