Are There Too Many Minibuses in Cape Town? Privatized Provision of Public Transit [Job Market Paper] [paper]
Workers in low- and middle-income countries waste significant time commuting, partly due to gaps in public transit. In many African cities, privately-operated minibuses provide 50–100% of urban transit, at the cost of long wait times and poor personal safety for riders. Which externalities does the private provision of transit generate, and can policy interventions improve the market allocation? I build a micro-founded model of privatized shared transit subject to externalities in matching between buses and passengers, security provision, and road congestion. I then estimate the model with newly-collected data on minibus operations in Cape Town and stated user preferences for exogenously-varied commute attributes. I find that an optimal subsidy on minibus entry corrects matching externalities and particularly benefits low-skill workers on long routes. Government actions to improve security bring even more substantial welfare gains.
We propose a theory-inspired measure of the accessibility of a city’s center: the size of the surrounding area from which it can be reached within a specific time. Using publicly-available optimal routing software, we compute these "accessibility zones" for the 109 largest American and European cities, separately for cars and public transit commutes. Compared to European cities, US cities are half as accessible via public transit and twice as accessible via cars. Car accessibility zones are always larger than public transit zones, making US cities more accessible overall. However, US cities’ car orientation comes at the cost of less green space, more congestion, and worse health and pollution externalities.
Retraining is often hailed as a key policy tool to support workers displaced by import competition, yet there is surprisingly little evidence on whether these policies achieve their intended effects. Using administrative data from Germany, a highly open economy with extensive government-subsidized retraining programs, we provide evidence that workers routinely retrain in response to import competition. To quantify the welfare impact of retraining policies, we propose a search model in which heterogeneous workers may choose to retrain while unemployed. Retraining enables workers to change their job-finding rates and their productivity while employed. We find that retraining increases the gains from trade by 7% in the aggregate. Some worker groups gain five times as much, while others gain virtually nothing.