Does fare-free transit increase labor-force participation and reduce income inequality?

Abstract

Fare-free transit policy is not new to several public transit systems and communities in the U.S., as some local transit agencies have begun implementing fare-free transit policies or variations of them since the 1960s. Over time, the discussion regarding fare-free transit has been reignited by decreasing ridership trends in recent years and other thematic inquiries surrounding access, mobility and equity, operational efficiency, agency financial health, and community impacts. This research empirically investigates the effects of fare-free policy on transit ridership, labor force participation and income inequality. Using panel data regression models, we draw several conclusions: 1) Fare-free transit significantly increases ridership. 2) Fare-free transit neither significantly increases labor force participation rate nor reduces income inequality in small and medium-sized urbans. 3) Fare policy aside, external factors such as increased household income and work-from-home significantly reduce the demand for transit in small-urbanized areas.