REDISTRIBUTIVE EFFECTS ON CONSUMPTION AND INCOMEOF SUBSIDIES TO PASSENGER TRANSPORTATION IN THE BRAZILIAN ECONOMY

Resumo

Brazilian households spend nearly the same amount on transportation and food. Public transport, despite its relevance, has become more expensive, with fare increases and declining quality. This scenario highlights the need to discuss subsidies for public transport and evaluate their impact on income redistribution, considering differences among income groups.
Such effects can be analyzed through a national Dynamic Computable General Equilibrium (CGE) model, supported by a Social Accounting Matrix (SAM). This structure details how income is generated and appropriated, expenditure patterns, five representative households, and four passenger transport services.
To test the model, this research examines the redistributive and economic impacts of subsidies on selected urban public transport activities in Brazil. Findings indicate that subsidies positively influence the economy, especially by strengthening the domestic market. Middle- and low-income households benefit most, as subsidies reduce transportation costs and free resources for other consumption.
At the sectoral level, increased household income stimulates production in industries tied to consumption, particularly food and services, reflecting the spending patterns of lower-income groups. This dynamic fosters production and investment, while easing the burden of transport on household budgets. Ultimately, subsidies promote income redistribution and broaden access to essential goods and services.