Household spending on transport in Latin America and the Caribbean: A dimension of transport affordability in the region

Document Type

Journal Article

Publication Date


Subject Area

place - south america, place - urban, economics - subsidy, policy - equity, ridership - demand, planning - surveys


Transport spending, Household spending, Latin America and the Caribbean, Transport affordability


In Latin America and the Caribbean (LAC), transportation constitutes one of the major items in the basket of good and services consumed by households. This paper describes household spending on transport in the region. Engel curves are estimated to understand the relationship between transport spending and changes in household income. Using income and expenditure surveys from 2003 to 2014 in 12 LAC countries – Bahamas, Bolivia, Brazil, Chile, Costa Rica, Ecuador, Honduras, Mexico, Nicaragua, Panama, Paraguay, and Uruguay – this paper finds a notable heterogeneity in transport spending in LAC. The results of the Engel curves lead to two simultaneous challenges, and the need to develop an urban transport strategy following a two-pronged approach. Low income population, that rely heavily on the use of public transport, face an affordability problem. Concurrently, the high-income elasticity of private transport, coupled with the growth of the middle class in the region, point to an ever-increasing private car ownership. On the public transport dimension, affordability should be addressed through demand side subsidies as they are known for minimizing errors of inclusion and avoiding supply side distortions. On the private transport dimension, the elasticities calculated suggest that fiscal policy instruments (taxes and charges) to pursue a desired outcome may not have the looked-for impact.


Permission to publish the abstract has been given by Elsevier, copyright remains with them.


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