Cities have long wrestled with persistent congestion and long commuting times. Urban planners and policymakers have championed a strong role for mass transit in meeting the demands of daily transportation, and governments have made big investments to support transit development.

Most of this development, however, has happened in what might be called “older” cities, where high-density development has traditionally promoted transit use. But what happens when a mass rapid transit system is launched in a newer city that has never had one? Will a network of subways and light rail affect daily life in a discernible way? If so, how will society benefit, and how can those benefits be measured? In his paper, “Commuting, Labor, and Housing Market Effects of Mass Transportation: Welfare and Identification,” Christopher Severen of the Federal Reserve Bank of Philadelphia describes how his quantitative model addresses these questions.

To study the effects of introducing commuter rail to a transit-deficient city, Severen looks at the development of the Los Angeles County Metro Rail project, which opened its first transit line in 1990 and added more lines in subsequent years. Using commuting data for Los Angeles County (and its four adjacent counties), his analysis captures commuting activity prior to 1990 and compares it to commuting flows in 2000, by which time the rail system had grown substantially. He specifically measures travel volume between census tracts, with each route being referred to as an origin-destination pair. Severen studies the magnitude of the transit system’s success at connecting residential census tracts with other tracts that are geared toward commercial use (labeled in the study as “workplace” tracts). Further, he investigates whether an increase in transit adoption can materially affect residential and commercial tracts by influencing economic fundamentals such as wages and real estate markets (more on this follows). His model, while being as restrained and modest as possible, isolates the degree to which commuting changed the city’s economic landscape during the time period he studied.

Whereas prior researchers have frequently interpreted changes in travel times as indicative of changes in commuting flows, this author looks specifically at commuting flows between pairs of rail stations.

Across the five counties in his sample, Severen finds that automobile volume did not decrease by much by 2000, reflecting the profound entrenchment of the automobile in the Los Angeles metropolitan area. The slow adoption of rail travel also appears to be exacerbated by factors such as a restrictive zoning environment that limits the density of housing in areas adjacent to train stations.

At the same time, however, Severen’s model indicates that total commuting flows indeed increased in certain cases, particularly between tract pairs closest to rail stations. Those particular tract pairs were more active than pairs that were distant from stations: By 2000, tract pairs that contained stations saw commuting flows increase by 16 percent relative to tract pairs that were distant from stations, while nearby tract pairs saw a relative increase of 14 percent.

The author pursues additional areas of inquiry, seeking to discern outcomes that are linked to rail transit but are less obvious than sheer commuting flows. They include, for example, changes in labor markets and housing markets. Surprisingly, his model finds little evidence that housing and labor markets are significantly influenced by the appearance of Los Angeles’s mass transit system before 2000. This goes against results observed in other U.S. metropolitan areas, where employment growth and gentrification have been reported in the wake of new transit service. In other words, although the introduction of public transit is generally believed to stimulate local development and greater economic wealth, Los Angeles does not seem to share in this experience. Household income, to cite an additional piece of evidence, does not appear to change after the introduction of rail lines.

In addition to investigating the benefits attributable to the introduction of the Los Angeles Metro Rail system, Severen assesses its costs. Here again, his discoveries are surprising. “A general conclusion,” he writes, “is that the commuting benefit of rail transit in Los Angeles does not exceed its cost” after 10 years of operations. This shortfall, he concludes, manifests itself no matter how conservatively costs are estimated; even at the lowest assumption of annualized costs (which consist of capital investments as well as operating costs), the benefits of the Los Angeles Metro Rail network are less than its financial outlays.1

The author lists several considerations to keep in mind when interpreting his model’s results. He notes some realities peculiar to Los Angeles — such as the restrictive zoning posture mentioned earlier — that render it less amenable to adopting transit.2 He also reports that many Los Angeles commuters do not live in census tracts connected to their workplaces via rail. (In a similar conundrum, only 1–3 percent of the population was fortunate enough to work in locales that were near train stations.) Severen further observes that “many high-flow pairs [of census tracts] are not connected” via rail.

Severen’s work demonstrates that transit adoption in Los Angeles faces many obstacles. The quantitative evidence generated by his model therefore serves as a note of caution to policymakers in other cities who are considering investments in rail systems — especially if their plans aren’t accompanied by efforts to increase housing density and provide a truly robust, highly accessible transit network. Given its car-oriented culture and large, widely dispersed population, Los Angeles offers a productive laboratory in which to study the adoption of mass transit. It is, as Severen says, a good place to investigate “whether new mass-transit infrastructure in less-dense cities provides appreciable benefits.”

  1. The views expressed here are solely those of the authors and do not necessarily reflect the views of the Federal Reserve Bank of Philadelphia or the Federal Reserve System.
  2. The author points out that these calculations are based on baseline benefits — namely, benefits to housing and labor markets. Other, more-tangential benefits (like reduced congestion and improved air quality) are discussed in the paper, and including them in the calculations moderately increases the total benefits of the rail system. Severen stresses, however, that these benefits are less concrete than those at the heart of his study.
  3. Ballot initiatives and regulatory constrictions have inhibited development within residential areas that contain rail stations. The paper proposes that even a relatively mild easing of land-use regulations would result in significantly more use of the new transit system.