This paper analyses the redistributive effects generated by the subsidization ofurban public transport services. We estimate a two-stage model that takes intoaccount both car ownership decisions and expenditure in urban public transport.In this way, we are able to measure the long run effects of income changes. Underthe assumption that the user is the final beneficiary of the subsidies, andcomputing the share of the fare that is subsidized, we measure the progressivenessof the subsidies for different income groups and city sizes. Urban public transportsubsidies are shown to be progressive. In larger urban areas this effect isconsiderably more important than in small ones. © 2003 Taylor & Francis Group, LLC. All rights reserved.