In order to meet the challenges of providing affordable public transit services without
compromising the financial sustainability of the system, many transit systems are setting
fares at cost-recovery. However, in order to offer affordable transport services for the urban
poor, cities can provide target subsidies. Bogotá has implemented a pro-poor public transit
subsidy scheme that leverages the adoption of smartcards in its new public transit system and
the country’s poverty targeting instruments. This paper presents a critical analysis of the
rationale, design and implementation of Bogota’s public transit subsidy. Based on this
experience, we explore two research questions: What are the determinants of user’s “selfselection”?
What are the causal links between the subsidy and labor market outcomes:
employment and income? Two regressions, (linear and probabilistic) were used to identify
the characteristics of individuals who choose to request the subsidized fare. A quasiexperimental
technique was used for the impact assessment of the subsidy on labor market
outcomes. This research allows us to being to understand how to design targeted subsidies
for maximum labor market outcomes.