Free Public Transport: More Jobs without Environmental Damage?

TL;DR

Implementing free public transport in Brazilian localities boosts employment by 3.2%, reduces greenhouse gas emissions by 4.1%, and demonstrates that transport policies can promote economic growth while mitigating environmental impact.

Contribution

This study provides empirical evidence that free-fare transit policies can simultaneously increase employment and decrease emissions, highlighting a potential policy tool for sustainable urban development.

Findings

Fare-free transit increases employment by 3.2%.

Emissions decrease by 4.1% due to sector shifts.

Net benefits are positive when considering economic and environmental gains.

Abstract

We study the effects of a free-fare transport policy implemented by Brazilian localities on employment and greenhouse gas emissions. Using a staggered difference-in-differences approach, we find that fare-free transit increases employment by 3.2% and reduces emissions by 4.1%, indicating that transport policies can decouple economic activity from environmental damage. Our results are driven by workers transitioning from higher-emission to lower-emission sectors instead of being driven by a decline in private transportation use. Cost-benefit analyses suggest that the costly policy only presents net benefits after considering the tax inflows of the increased economic activity and the benefits of reduced carbon emissions.