Public transport demand elasticities during the recessionary phases of economic cycles

Abstract

The serious recession suffered by the Spanish economy has had an important impact on the working of transport systems. This article provides evidence of how the state of the economy, measured using per capita income levels and unemployment rates, can influence the demand for public transport by bus with data from the city of Santander (Spain) for the period 2001-2012. The methodology used has involved the short and long run equilibrium demand elasticities estimation using a log-log regression model considering the presence of autocorrelation in the residuals and the endogeneity of the transport supply. The results show that the demand for transport is sensitive to changes in unemployment rates with an elasticity estimated at 0.133 in the static equilibrium model and of 0.210 in the long run dynamic model. The resulting elasticity for income levels was not significant in all the models, with a parameter estimated in the static model of -0.505 and of -0.861 in the long run dynamic model. The model estimated by two stage least squares validated using data from 2013 with unemployment rate as an independent variable gave the lowest average square error in validation.