Means-tested transit subsidies in Latin America

Andrés Gómez-Lobo, Santiago Sánchez González and Vileydy González Mejia

No 12500, IDB Publications (Working Papers) from Inter-American Development Bank

Abstract: This paper reviews three targeted transit subsidies applied in Latin America. The Vale Transporte scheme in Brazil is the oldest, having been introduced in 1985. Household survey data for 26 metropolitan areas were used to estimate the distributional impact of the Vale Transporte. The results indicate that this program is badly targeted to low-income individuals. In 19 of the 26 cities, this subsidy is regressive. The reason is that only formal sector workers are eligible for this benefit while many low-income individuals work in the informal sector in Brazil. In addition, since this subsidy is paid by employers it is reasonable to expect compensating equilibrium effects in wages or unemployment. We present evidence that suggests that this may have occurred with wages. In contrast, Bogota and Buenos Aires have implemented demand side means-tested subsidies during the last decade. In these cases, criteria from the general welfare system are used to determine eligibility and both have been implemented using smartcard payment technology. We review the available information on the design, operation, and distributional outcomes for each case. This review provides useful information for policymakers interested in the design and implementation of targeted transit subsidies.

Keywords: subsidies; transit; means-tested; Latin America (search for similar items in EconPapers)
JEL-codes: H20 L91 R40 (search for similar items in EconPapers)
Date: 2022-10
New Economics Papers: this item is included in nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://publications.iadb.org/publications/english ... in-Latin-America.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:idb:brikps:12500

DOI: 10.18235/0004532

Access Statistics for this paper

More papers in IDB Publications (Working Papers) from Inter-American Development Bank Contact information at EDIRC.
Bibliographic data for series maintained by Felipe Herrera Library ().