KOTI - Korea Transport institute

In recent years, national welfare policies designed to improve the public's quality of life has been delivered intensively. Considering the trends of the current national policy, there is a need to take the transport sector into account, which is one of the key industries of the national economy. However, there is little research dealing with these issues in the transport sector, especially a study about the welfare effect of a transportation subsidy. Due to these problems, taking the viewpoint of social welfare, we analyze the welfare effects of the financial subsidy in the transport sector and propose a new alternative to the transport financial subsidy; "user grant program." To analyze the welfare effects of the financial subsidy, we construct a transportation-oriented social account matrix (SAM) and draw the household income distribution effect of each transportation field subsidy. Results show that the current public transport subsidies have no welfare effect, rather exacerbating income redistribution. But the user direct grant alternative has a welfare effect by decreasing the Gini coefficient. Additionally, we analyze the expected effect of this new alternative by stated preference method (SP) based on recent surveys with 850 individuals both in Seoul and Busan. According to the results, several implications were uncovered. First, if the mass transport fare would be raised in place of subsidies to mass transport businesses, a user direct grant should be guaranteed at least as much as the raised fare. Second, with respect to users, a user direct grant is more effective than a tax rebate. Third, local governments should individually consider local conditions and status to implement a "user grant program" effectively. Fourth, government should create policy enabling the lower income bracket to use mass transportation on a greater scale. Based on this results, three policy implications are as follows. First, introduce a user direct grant program, for example a bus or subway pass. Second, implement a grant program for the lower income bracket. Third, implement public transport support for businesses to encourage supporting their employees to take advantage of fringe benefits such as commuting subsidies. In conclusion, we suggest several policy implications advocating government decision makers to establish a welfare policy transportation plan