An increase of welfare and a decrease in taxi demand: why have wages of taxi drivers been stagnant for decades in Japan?

Author Name HASHIMOTO Yuki (Fellow, RIETI) / KOMAE Kazutomo (University of Tokyo)
Creation Date/NO. October 2019 19-J-053
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This study finds that the increased number of "welfare vehicles" or wheelchair-accessible and other adaptive equipment-equipped vehicles and licensed transportation services using these vehicles has contributed to the declining demand for taxis since the 1990s. According to the analytical results using prefecture panel data, a 10% increase in these vehicles has caused a 0.9% decrease in the number of passengers carried and a 1.3% decrease in annual fare revenue. Also, a 1% decrease in fare revenue has caused a 1.3% decrease in driver's average earnings, reflecting the payment structure for taxi drivers, which strongly depends on their fare revenue. "Welfare vehicles" which are licensed by the government in order to complement transportation by public transportation such as taxis and buses, in fact, have met the transportation needs of the elderly with mobility difficulty, implying that the transportation service provided by "welfare vehicles" have substituted for taxis demand to some extent.

The English version of this paper is 21-E-074.