Distributive impact of transport expenditure: the case of Uruguay

Andrés Pereyra and Marcelo Pérez
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Andrés Pereyra: Inter-American Development Bank / Universidad de la República
Marcelo Pérez: Universidad ORT Uruguay. Facultad de Administración y Ciencias Sociales. Departmento de Economía

No 90, Documentos de Investigación from Universidad ORT Uruguay. Facultad de Administración y Ciencias Sociales

Abstract: We estimate income elasticity of transport services consumed by households using data from the Expenditure and Income Survey of Uruguay (1994, 2006); applying non parametric methods proposed by Lerman and Yitzahki (1984, 1985, 1989, 1994) and parametric methods (sample selection of Heckman), with specifications proposed by Costa (1997) and Hausman et al. (1995). Regarding to consumption patterns in Uruguay, individual transport goods and services are luxury goods; whereas only goods related to public transport are normal ones. Public transport remains as a luxury good for the first quintile of income, an inferior good for the richer quintile, and a normal good otherwise. Consumption patterns evolve to those that characterize developed countries. Results are consistent with those estimated by Berri et al. (2010) for different countries in the European Union. Implications for public policies design are analyzed, especially in investment decision making, investment financing, and regulatory policies. The BRT in public transport systems asks regulators for allocation of rights of use of limited urban space between public transport and car users. Public investment in infrastructure or services of transport are not considered income of benefited sectors. We therefore question the validity of using information from expenditure decisions for evaluating the impact of public decisions in welfare distribution.

Keywords: income elasticity; income distribution; Gini coefficient; Engel curves (search for similar items in EconPapers)
Pages: 27 pages
Date: 2013-04
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