JUE insight: Ticket to paradise? The effect of a public transport subsidy on air quality

Abstract

This paper provides novel evidence on the impact of public transport subsidies on air pollution. We obtain causal estimates by leveraging a unique policy intervention in Germany that temporarily reduced nationwide prices for regional public transport to a monthly flat rate price of 9 Euros. Using DiD estimation strategies on air pollutant data, we show that this intervention causally reduced a benchmark air pollution index by more than eight percent and, after its termination, increased again. Our results illustrate that public transport subsidies – especially in the context of spatially constrained cities – offer a viable alternative for policymakers and city planers to improve air quality, which has been shown to crucially affect health outcomes.