Tax(i)ing the poor? Commuting costs in South Africa

Andrew Kerr

No 156, SALDRU Working Papers from Southern Africa Labour and Development Research Unit, University of Cape Town

Abstract: In this paper I describe the monetary and time costs of commuting to work in South Africa. I find that these costs are high and that monetary costs of commuting have increased faster than inflation, mainly through a shift away from walking and towards minibus taxis and driving. Journey times are substantially higher than the OECD country average. Using a method suggested by Hausmann (2013) I estimate the effective tax on hourly earnings that the time and monetary costs of commuting impose. I find high effective tax rates, which are a disincentive to working far from home. This only deepens the puzzle of why South Africa's informal sector is so small, since more than half of the informally self-employed work at home and pay no transport costs. I show that whilst minibus taxis conveyed around 71% of commuters that used public transport in 2013, the industry receives less than 1% of the direct public transport subsidy provided by the South African government. I find that the subsidy accrues mainly to bus and train users in the lower middle part of the labour income distribution.

Keywords: Commuting costs; Minibus taxis; South Africa (search for similar items in EconPapers)
Date: 2015
New Economics Papers: this item is included in nep-iue, nep-pbe, nep-tre and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:ldr:wpaper:156

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