Association for Public Policy Analysis & Management

High urban transportation costs are a potential barrier for workers seeking employment. Light rail transit has become a common policy intervention to enhance access to job opportunities and revive lagging urban areas. The effect of light rail is analysed for four US metros between 2000 and 2013. Analysis is restricted to neighbourhoods that may have received light rail exogenously, independent of local economic conditions. Results of a neighbourhood level propensity score weighting estimator show that light rail caused both a significant rise in public transit mode share among commuters and improved local labour market outcomes. A decomposition exercise reveals that induced demographic shifts do not fully explain the transportation mode switching effect or the local labour market gains. A structural model is subsequently proposed and estimated to provide insight into worker responses. Models are estimated with detailed commuter flow information combined with novel Google navigation data. Structural results suggest that the welfare benefits of light rail transit outweigh the costs.