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

25 Pages Posted: 17 Feb 2021

See all articles by Adriano Borges Costa

Adriano Borges Costa

Massachusetts Institute of Technology (MIT); MIT Sustainable Urbanization Lab; MIT Center for Real Estate

Camila Ramos

Massachusetts Institute of Technology (MIT)

Siqi Zheng

Samuel Talk Lee Professor of Urban and Real Estate Sustainability, Faculty Director of MIT Center for Real Estate

Date Written: February 15, 2021

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.

Suggested Citation

Costa, Adriano Borges and Ramos, Camila and Zheng, Siqi, Subway Expansion, Jobs Accessibility and Home Value Appreciation in Four Global Cities: Considering Both Local and Network Effects (February 15, 2021). MIT Center for Real Estate Research Paper No. 21/01, Available at SSRN: https://ssrn.com/abstract=3784735 or http://dx.doi.org/10.2139/ssrn.3784735

Adriano Borges Costa (Contact Author)

Massachusetts Institute of Technology (MIT) ( email )

77 Massachusetts Avenue
Cambridge, MA 02139
United States

MIT Sustainable Urbanization Lab ( email )

77 Massachusetts Avenue
Cambridge, MA 02139
United States

MIT Center for Real Estate ( email )

United States

Camila Ramos

Massachusetts Institute of Technology (MIT)

77 Massachusetts Avenue
50 Memorial Drive
Cambridge, MA 02139-4307
United States

Siqi Zheng

Samuel Talk Lee Professor of Urban and Real Estate Sustainability, Faculty Director of MIT Center for Real Estate ( email )

Building 9-323
Cambridge, MA 02139
United States

HOME PAGE: http://https://siqizheng.mit.edu/

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