Title

Do Transit Investments Increase Agglomeration Economies?

Abstract

Some public transport projects may increase economic productivity by facilitating the growth of urban agglomerations of firms. Understanding the potential for such impacts could be useful in allocating funding to maximize the benefit of such investments. To explore whether and how these impacts should be estimated, we reviewed academic and practitioner literature and interviewed staff and consultants familiar with public transport funding applications. Relevant academic studies are piecemeal and diverse. They use different dependent variables (e.g., changes in productivity, firm revenues, wages, and land values) and different independent variables (e.g., accessibility changes and changes in density). The spatial unit of analysis ranges from the metropolitan region to small areas. But there has been almost no direct study of public transport investments and how they relate to agglomeration economies. Interview respondents cited a variety of methods in estimating economic benefits, but these generally do not account for external agglomeration benefits. We identify ways to conduct research building on this literature that is relevant for this particular question and that is relevant to practitioners. We also present initial evidence from a longitudinal study of rail starts using a hundred metropolitan areas over a ten-year period.