Many cities in the developing world are reforming transit by formalizing bus services to capture user and nonuser benefits. A forerunner in transit reform, the city of Bogotá, Colombia, first implemented the TransMilenio bus rapid transit (BRT) system and then more recently undertook a large-scale initiative to formalize and regulate traditional urban buses in the city. This integrated public transport system [Sistema Integrado de Transporte Público (SITP)] is transforming Bogotá’s traditional urban bus system into a regulated, concessionary system with restructured bus routes that integrates operations, fares, and infrastructure with the TransMilenio BRT. An investigation was conducted to determine whether the SITP has increased affordability and employment accessibility for public transit users in Bogotá. Results revealed that most accessibility improvements resulted from the recent expansion (and significantly higher speeds) of TransMilenio rather than the SITP. Results of an analysis conducted with budget constraints to determine affordable accessibility indicated that employment accessibility was reduced overall; however, the new integrated fare increased accessibility over traditional buses, especially on the periphery and in southern areas of the city, as a result of reduced transfer costs. Overall, results partly explain the lack of enthusiasm for the bus reform process on the part of public transit users and the political discomfort that becomes apparent when embarking on this process in developing-world cities. Also, more incremental, flexible reform might be crafted for public transportation systems that are dominated by informal services.

The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the views of the International Bank for Reconstruction and Development/World Bank and its affiliated organizations, or those of the Executive Directors of the World Bank or the governments they represent.

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To meet the challenges of providing affordable public transit service without compromising the financial sustainability of the system, many transit systems are setting fares at cost-recovery levels. However, to offer affordable transport service for the urban poor, cities can provide targeted subsidies. Bogotá, Colombia, has implemented a pro-poor public transit subsidy scheme that leverages the adoption of smart cards in its new public transit system and the country’s poverty-targeting instruments. This study presents a critical analysis of the rationale, design, and implementation of Bogotá’s public transit subsidy. On the basis of this experience, two research questions were explored: What are the determinants of the user’s self-selection? What are the causal links between the subsidy and labor market outcomes of employment and income? Two regressions (linear and probabilistic) were used to identify the characteristics of individuals who choose to request the subsidized fare. A quasi-experimental technique was used for the impact assessment of the subsidy on labor market outcomes. This research allows an understanding of how to design targeted subsidies for maximum labor market outcomes.