SMU SOE Seminar Series (July 10, 2025): Transit Subsidies, Seniors, and Welfare: Evidence from Korea

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ABSTRACT

This paper leverages a quasi-experimental policy in Korea and novel cellphone mobility data to assess the welfare consequences of granting older adults free subway access. We document that the subsidy increases seniors' subway rides without reducing car rides. It is regressive and increases seniors' visits to locations that may improve health. We then estimate a transportation mode choice model to evaluate the current policy and its alternatives, capturing equilibrium congestion effects. Our simulations reveal that congestion costs are substantial. A consumer-surplus-equivalent policy offering equal discount for both buses and subways dominates the current policy across extensive configurations of distributional weights and uninternalized health benefits.

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