Abstract
Workers in developing countries waste significant time commuting, and gaps in public transit constrain access to productive jobs. In many cities, privately-operated minibuses provide 50–100% of urban transit, at the cost of long wait times and poor personal safety for riders. Can policymakers improve upon the privatized provision of public transit via subsidies, which leverage increasing returns in wait times, or technological upgrades? I build a micro-founded model of privatized shared transit where minibuses load passengers from a queue. I then estimate the model with newly-collected data on minibus and passenger queues in Cape Town and stated user preferences for exogenously-varied commute attributes. I find that governments should subsidize minibuses and their passengers because neither internalize their beneficial spillovers to wait times. This optimization shortens queues, fills buses faster, and particularly benefits low-skill workers. Government actions to expand minibus stations or improve security bring even more substantial welfare gains.
The seminar will be held in room 1249 (12th floor) at Eilert Sundts Hus. The address is Moltke Moes vei 31.