Subways and Road Congestion

56 Pages Posted: 3 Jan 2019

See all articles by Yizhen Gu

Yizhen Gu

Jinan University

Junfu Zhang

Clark University; IZA Institute of Labor Economics

Ben Zou

Michigan State University - Department of Economics

Date Written: December 15, 2018


We estimate the effect of subways on road congestion. Existing empirical studies have been constrained by small numbers of treated cases and imperfect measures of road speed. We study 45 subway line openings across 25 Chinese cities, and use big data from mobile devices that generate high frequency speed information at the road segment level. We adopt a difference-in-differences approach that compares changes in speed in nearby road segments after a subway line opens with contemporaneous changes in road speed in control cities. We find that subways increase rush-hour speed in nearby roads by about 5%. The magnitude of the effect exhibits a hump-shaped pattern: Speed increases in the first few weeks after subway line opening and then declines and stabilizes. The effect is concentrated in initially congested road segments and declines quickly over distance. Evidence on road speed is corroborated by substitution patterns between modes of transportation. We build a simple conceptual framework of transportation mode choices as a guidance for analyzing the welfare impacts of subways. Using data from Beijing, we find that benefits from saved driving time and reduced congestion externality is smaller than the welfare loss due to government subsidies in subways.

Keywords: subway, congestion, public transit

JEL Classification: R41, R42, L92

Suggested Citation

Gu, Yizhen and Zhang, Junfu and Zou, Ben, Subways and Road Congestion (December 15, 2018). Available at SSRN: or

Yizhen Gu

Jinan University ( email )

Huang Pu Da Dao Xi 601, Tian He District
Guangzhou, Guangdong 510632

Junfu Zhang

Clark University ( email )

950 Main Street
Worcester, MA 01610
United States

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072

Ben Zou (Contact Author)

Michigan State University - Department of Economics ( email )

East Lansing, MI 48824
United States

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