Subway Expansion, Jobs Accessibility and Home Value Appreciation in Four Global Cities: Considering Both Local and Network Effects

Abstract

We explore the potential of incorporating accessibility analysis in studying the impact of subway expansions on the real estate market. We first demonstrate that using increases in accessibility to firms as a continuous treatment variable instead of its binary alternative, the station-dummy approach, yields better goodness-of-fit in a quasi-experimental econometric analysis. We show that the dummy treatment variable consistently reported overestimated coefficients of impact for new subway stations. Furthermore, accessibility measures allow the exploration of impacts beyond the local effects around new subway stations, shedding light on network impact that has been largely overlooked in the literature. To provide greater external validity to our results, we apply the same analysis to the cities of Santiago (Chile), São Paulo (Brazil), Singapore, and Barcelona (Spain) and explore the common results. We argue that the integration of urban economics and transportation analysis can bring innovation to the empirical approach commonly adopted in the literature, and the use of accessibility measures in causal empirical studies on transportation impacts can produce more robust and comprehensive results and capture the nuanced spatial heterogeneity effects.