Driving over the hill - Car intensity during structural transformation - Working Paper Series 2024

Sep 18, 2026

Examines car intensity as the number of licensed private cars per unit of GDP and as an intrinsic component behind the observed “peak car” phenomenon. Using data for 88 countries from 1950 to 2010, the study shows that car intensity follows a hump-shaped evolution during economic development. A general equilibrium model links structural transformation to this pattern and quantifies explanatory power for 2010 cross-country differences.

LanguageEnglish

CategoryResearch & Report

FormatPDF

Pages78

Reading Time3 h 17 min

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1. Introduction

1.1. Peak car

UCD CENTRE FOR ECONOMIC RESEARCH WORKING PAPER SERIES 2024 Driving over the hill: Car intensity during structural transformation Ciaráan Mac Domhnaill University College Dublin School of Economics WP24/20 December 2024 UCD SCHOOL OF ECONOMICS UNIVERSITY COLLEGE DUBLIN BELFIELD DUBLIN 4 Driving over the hill: Car intensity during structural transformation Ciar´an Mac Domhnaill 1,2, * Draft: December 2024 . Please do not cite without permission from the author. This paper examines the number of licensed private cars in the economy per unit of GDP, or car intensity, as an intrinsic component of car use that may be underlying the observed peak car phenomenon. Using data on 88 countries from 1950 to 2010, I demonstrate that car intensity evolves in a hump-shaped pattern during economic development. I develop a general equilibrium model to argue that structural transformation can generate this trend. My calibrated model can account for just under a quarter of observed variation in car intensity among 54 countries in 2010 . Counterfactual exercises show that the peak level of intensity is lower for economies that develop later. Key words: peak car; structural transformation; economic growth; economic development; industrialisation; transport. JEL codes: O41; N10; O18; R10 . 1 Department of Economics, University of St Andrews Business School, United Kingdom. 2 School of Economics, University College Dublin, Ireland. * Corresponding author. Email: [ciaran.macdomhnaill@ucd.ie](ciaran.macdomhnaill@ucd.ie. Present)[. Present](ciaran.macdomhnaill@ucd.ie. Present) address: School of Economics, University College Dublin, Belfield, Dublin 4, Ireland. 1 . Introduction Transport accounted for 34 per cent of all carbon dioxide emissions in the United Kingdom (UK) in 2022, with the majority of this stemming from road transport (UK Department for Energy Security and Net Zero 2023a) . This is thus a key sector where a reduction in emissions is required to meet the Paris Climate Change Agreement’s target of limiting the global temperature rise to 1.5 degrees Celsius (Masson-Delmotte et al. 2018) . The United Nations (UN 2021b) has also identified sustainable transport as a key enabler of a range of Sustainable Development Goals. Reductions in motor vehicle use will be required alongside advances in fuel efficiency and in electric vehicle technology to ensure a decrease in carbon emissions.1 In addition to reduced carbon emissions, a reduction in car use can contribute to congestion relief, improved air quality, increased active travelling, increased wellbeing and improved accessibility (Goodwin 2020) . This study is focused on the level of car use as a country develops, and asks the following questions: How does the dependency of an economy on car use evolve as the economy develops? What role does structural transformation, the redistribution of economic activity among the broad agriculture, manufacturing and services sectors (Herrendorf, Rogerson, and Valentinyi 2014), play in this relationship? In considering these questions, I analyse trends in car use per unit of gross domestic product (GDP), orthe level of car use required to produce one unit of GDP, as GDP per capita rises. This can be referred to as the intensity of car use. Uniquely, I will show that among developed economies, the intensity of car use displays an inverted U-shaped or hump-shaped relationship with GDP per capita, increasing initially before peaking and later decreasing. The study will then explore this dynamic by developing a theoretical model of structural transformation capable of reflecting the hump-shape in car use per GDP. 1.1. Peak car While specifically considering car use per unit of GDP, this study is closely related to the debate in transport literature surrounding ‘peak car’. The peak car phenomenon has been described as a levelling off in various measures of car use, such as annual per-capita distance travelled in cars

FAQs

What does the paper define as “car intensity”?

Car intensity is the number of licensed private cars in the economy per unit of GDP. It reflects the level of car use required to produce one unit of GDP.

What pattern does car intensity follow during economic development?

Using data from 1950 to 2010 across 88 countries, the paper finds that car intensity evolves in a hump-shaped (inverted U-shaped) way as economies develop.

How is structural transformation used to explain the hump shape?

The paper develops a general equilibrium model arguing that structural transformation—shifts in economic activity across agriculture, manufacturing, and services—generates the observed hump-shaped trend in car intensity.

Sep 18, 2026

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