Privately-operated minibuses provide 50–100% of urban transit in often cash-strapped developing-country cities, at the cost of long wait times and poor personal safety. To quantify the gains from low-cost reorganization of this privatized provision of public transit, I build the first model of privatized shared transit, which features increasing returns in the form of shorter waits on busier routes and a key role for surplus bus supply as “insurance” against demand spikes. Market power of local minibus associations inhibits realization of the former but facilitates internalization of the latter. I then estimate the model with newly-collected data on minibus arrivals and passenger queues in Cape Town as well as stated preferences for exogenously varied commute attributes. A formalization program of government-set fares and subsidies leverages increasing returns to shrink wait times and queues, while government actions to enforce speed limits or improve security bring even more substantial welfare gains.
Retraining is often hailed as key policy tool for aiding displaced workers and smoothing the impact of sectoral shocks. We study the interaction of retraining and international trade in Germany, a highly open economy with extensive government-subsidized retraining programs. Using rich administrative data we provide evidence that workers routinely retrain in response to import competition and that the labour market effects of import competition are more muted for workers who do retrain. We introduce retraining into a model of workers from heterogeneous occupations who sort across sectors within a Ricardian trade framework. In our model, whenever retraining serves to broaden worker skills, it shrinks occupations’ trade exposure and compresses the distribution of trade-induced welfare effects. Calibrated to match our empirical results, the model reveals that retraining has little effect on Germany’s aggregate gains from rising imports from China and Eastern Europe but, in line with its skill-broadening function, reduces inequality among workers in the effects of import competition.
We propose a theory-inspired measure of the accessibility to a city’s central work location: the size of the surrounding area from which it can be reached within a specific time. Using publicly available optimal-routing software, we compute these ”accessibility zones” for the 100 largest cities in the US and Europe, separately for cars and public transit commutes. Compared with European cities, US cities are half as accessible via public transit and twice as accessible via cars. Car accessibility zones are always larger than public transit zones, so that US cities are accessible from larger areas than European cities. However, population density within the most accessible zones is relatively low in the US, and European cities provide more residents quicker access to their city centers. Moreover, greater car orientation is associated with less green space, more congestion, and worse health and pollution externalities.