Is There a Difference in Transport Consumption Inequalities Between Households in Urban and Rural Areas?



Is There a Difference in Transport Consumption Inequalities Between Households in Urban and Rural Areas?

Authors

L Kromann, Ole Kveiborg,Technical University of Denmark, DK

Description

The paper evaluates transport consumption inequalities in household expenditures using a decomposition of the Gini index. Focus is on differences between rural and urban areas and on the distributional effects of transport taxes.

Abstract

Transport costs comprise a large share of household expenditures (approximately 20% of total expenditures in Denmark), but with rather large variations between different household. The differences in expenditures are related to car ownership. Taxes (registration and excise taxes) on cars are in Denmark the second highest in the world behind Singapore. The large expenditures on and the size of taxes on transportation may thus lead to significant differences in the effects on households. Changes in transport taxes may therefore lead to larger or smaller in-equalities in the Danish society. The distributional impacts of taxing policies are for decision makers often of similar interest as efficiency. This paper contributes to shedding light on some of these impacts with an analysis into the distributional impacts of transport costs. We evaluate household transport consumption inequalities in Denmark focusing on differences in consumption inequalities between households in dense urban areas and households in rural areas, and estimate the redistributive effects of taxes on different transport commodity categories. Using household-level data from repeated cross-sections of expenditure surveys for 1997, 2002 and 2005, the paper applies a decomposition of the Gini index by expenditure component. The results show that the relative contribution of the households' transport expenditures to total expenditure inequality in rural areas is larger than their counterpart in urban areas, primarily due to a large difference in expenditures related to cars. The inequality in all the components of car expenditures is relatively high and decreasing over time in both areas, as a consequence of the effect of the social diffusion of the car. The marginal effect of an increase in car related expenditures is found to result in a vast decrease in consumption inequality in both areas. However, effects of changes in the excise tax on car ownership, the fuel tax, and the tax imposed on public transport are found to have different effects on the consumption inequalities in rural and urban areas. These findings demonstrate that policy makers must not overlook differences in consumption inequality between households in dense urban areas and households in rural areas when designing urban planning policies.

Publisher

Association for European Transport