Abstract

An increasing interest in transport affordability has brought attention to the factors driving household transport expenditure. Existent income inequality is part of what drives this interest. However, the possible causal link between income distribution and household transport expenditure is scarcely studied in the literature. In addition, the few existing studies only focus on post-tax income distribution. This paper provides the first known analysis that includes both pre-tax and post-tax income distribution, and a specific focus on the richest one percent. Random effects regressions and instrumental variables are used to analyse panel data covering 14 OECD countries during the 1992-2016 period. Inequality has an effect on overall household transport expenditure, and more specifically on purchase of vehicles and operation of private transport equipment. The pre-tax share of the rich increases overall expenditure on purchases of new private vehicles, with a decreasing effect when market inequality is high. The post-tax share of the poor has an effect on operation of transport equipment, but the sign of this effect depends on the existent level of post-tax inequality.