The Effectiveness of Public Transit Subsidies on Ridership and the Environment: Evidence from Canada

37 Pages Posted: 1 Feb 2016

See all articles by Nicholas Rivers

Nicholas Rivers

University of Ottawa - Graduate School of Public and International Affairs

Bora Plumptre

University of Ottawa - Institute of the Environment

Date Written: January 29, 2016

Abstract

We analyze the public transit tax credit (PTTC) introduced by the Canadian federal government in 2006. Using disaggregate microdata from the 2006 Census and 2011 National Household Survey, we apply a quasi-experimental difference-in-difference method to isolate the causal impact of the policy on transit ridership among commuters. Our regression models control for multiple socioeconomic determinants of transit demand and include highly resolved geographical fixed effects, which allow us to account for unobserved time-varying factors at the neighbourhood scale. We find the tax credit increases ridership by between about 0.25 and 1 percentage points, depending on assumptions. The large majority of recipients of the PTTC are those that would have taken transit regardless of the availability of the tax credit. With this estimate, we then perform a basic assessment of the policy’s environmental effectiveness in terms of reductions to greenhouse gas emissions and fiscal cost. Despite its promotion as a means of curbing traffic congestion and producing better outcomes for the global climate, we conclude that the PTTC is an expensive approach to achieving either public policy objective.

Keywords: Public transit, policy, tax credit, evaluation, greenhouse gas, environment

JEL Classification: R40, H23, C23

Suggested Citation

Rivers, Nicholas and Plumptre, Bora, The Effectiveness of Public Transit Subsidies on Ridership and the Environment: Evidence from Canada (January 29, 2016). Available at SSRN: https://ssrn.com/abstract=2724768 or http://dx.doi.org/10.2139/ssrn.2724768

Nicholas Rivers (Contact Author)

University of Ottawa - Graduate School of Public and International Affairs ( email )

75 Laurier Avenue East
Ottawa, Ontario K1N 6N5
Canada

Bora Plumptre

University of Ottawa - Institute of the Environment ( email )

1 Stewart St.
Ottawa, Ontario
Canada

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