Economics at your fingertips  

Agglomeration, housing affordability, and new firm formation: The role of subway network

Rui Du () and Siqi Zheng ()

Journal of Housing Economics, 2020, vol. 48, issue C

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.

Keywords: New firm formation; Subway; Agglomeration; Low-cost rental housing (search for similar items in EconPapers)
JEL-codes: L26 R11 R12 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

DOI: 10.1016/j.jhe.2020.101668

Access Statistics for this article

Journal of Housing Economics is currently edited by H. O. Pollakowski

More articles in Journal of Housing Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().

Page updated 2021-09-12
Handle: RePEc:eee:jhouse:v:48:y:2020:i:c:s1051137719301093