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Title: Commuting, Labor, and Housing Market Effects of Mass Transportation: Welfare and Identification
Citation Type: Miscellaneous
Publication Year: 2017
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Abstract: This paper develops a novel approach to examine how an important public good alters the equilibrium distribution of both people and prices in an urban setting: mass transportation infrastructure. I model a city as a collection of housing and labor markets that are connected by commuting and assemble a unique panel dataset that incorporates commuting flows, wages at place of work, and housing costs. I interact distance with constructed labor demand shocks to provide a plausibly exogenous source of variation in commuting patterns and recover price elasticities of supply and demand for labor and housing. The structural elasticities are then used to separately estimate the impact of the introduction of a transit station on supply and demand in local housing and labor markets. The model generates counterfactual prices and populations in the absence of mass transportation, permitting welfare analysis. I implement this approach to study the first phase of subway and rail construction in Los Angeles, a large, car-oriented city, between 1990 and 2000. High-dimensional fixed effects results indicate that the introduction of a new transit connection decreases the cost of commuting between locations with transit stations by 6.1%, increasing equilibrium commuting by 5.3% between connected locations. The increase in labor supply dominates a smaller disamenity effect. Because the LA Metro effectively lowers the utility cost of commuting over a portion of the consumer’s location choice set, it generates significant welfare benefits for workers by 2000. Only in generous specifications, however, do welfare benefits exceed annualized construction costs and operation subsidies.
Url: https://www.christopherseveren.com/ewExternalFiles/Severen_JMP_Recent.pdf
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Authors: Severen, Christopher
Publisher: University of California Santa Barbara
Data Collections: IPUMS USA
Topics: Housing and Segregation, Labor Force and Occupational Structure, Other
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