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Distributive impact of transport expenditure: the case of Uruguay

Author

Listed:
  • Andrés Pereyra

    (Inter-American Development Bank / Universidad de la República)

  • Marcelo Pérez

    (Universidad ORT Uruguay. Facultad de Administración y Ciencias Sociales. Departmento de Economía)

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.

Suggested Citation

  • Andrés Pereyra & Marcelo Pérez, 2013. "Distributive impact of transport expenditure: the case of Uruguay," Documentos de Investigación 90, Universidad ORT Uruguay. Facultad de Administración y Ciencias Sociales.
    • Handle: RePEc:avs:wpaper:90
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    References listed on IDEAS

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    3. Mas-Colell, Andreu & Whinston, Michael D. & Green, Jerry R., 1995. "Microeconomic Theory," OUP Catalogue, Oxford University Press, number 9780195102680.
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    5. Robert I. Lerman & Shlomo Yitzhaki, 1994. "Effect of Marginal Changes in Income Sources On U.S. Income Inequality," Public Finance Review, , vol. 22(4), pages 403-417, October.
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