Agglomeration, housing affordability, and new firm formation: The role of subway network
Name
SSRN-id3489225.pdf
Description
Accepted version
Size
2.13 MB
Format
Adobe PDF
Checksum (MD5)
9a3a609c451e6233445ece6cd71ec8c0
Author(s)
Du, Rui
Zheng, Siqi
Date Issued
June 2020
Journal
Journal of Housing Economics
Publisher
Elsevier BV
Citation
Du, Rui and Siqi Zheng. "Agglomeration, housing affordability, and new firm formation: The role of subway network." Journal of Housing Economics 48 (June 2020): 101668 © 2020
Version
Author's final manuscript
Abstract
The housing affordability issue in mega-cities creates a significant job-housing mismatch and undermines productive new business creation. This paper focuses on Beijing and investigates whether improved accessibility via the subway network helps new firms benefit from agglomeration economies and, at the same time, provides workers with easy access the low-cost rental housing. Using commercial rental housing transaction records and dynamic bilateral subway travel time from 2010-2015, we build the measure of the accessibility to business clusters and low-cost rental housing through the subway network at a high spatial resolution. Taking advantage of exogenous shocks from the network reconfiguration due to the rapid subway expansion in Beijing, we employ a matched difference-in-differences estimation in multiple periods to identify the causal elasticity estimate of the new firm formation with respect to the accessibility to business clusters and low-cost rental housing. We demonstrate that the subway network is more conducive to firm establishments. The effects are more salient for firms in skill-intensive sectors. New skill-intensive firms increase by 0.44% given a 1% increase in the accessibility to business clusters. The elasticity of new skill-intensive firms with respect to the accessibility to low-cost rental housing is about 0.74. Our findings that transit-oriented development leads to a higher concentration of new skill-intensive businesses, pointing to the importance of an efficient public transit system capable of serving the dispersed workforce and improving the efficiency of firm location choice.
MIT Department
Massachusetts Institute of Technology. Department of Urban Studies and Planning
Terms of Use
Creative Commons Attribution-NonCommercial-NoDerivs License
Persistent DSpace Link
DOI of Published Version
https://doi.org/10.1016/j.jhe.2020.101668
