The underground economy: Tracking the higher-order economic impacts of the São Paulo Subway System

• We assess the higher-order economic impacts of the subway in Sao Paulo.
• We integrate travel demand and spatial CGE models.
• Subway contributes to increase city growth and residents welfare.
• Subway favors the city economy in domestic and international markets.

Over one million workers commute daily to São Paulo City center, using different modes of transportation. The São Paulo subway network reaches 74.2 km of length and is involved in around 20% of the commuting trips by public transportation, enhancing mobility and productivity of workers. This paper uses an integrated framework to assess the higher-order economic impacts of the existing underground metro infrastructure. We consider links between mobility, accessibility and labor productivity in the context of a detailed metropolitan system embedded in the national economy. Simulation results from a spatial computable general equilibrium model integrated to a transportation model suggest positive economic impacts that go beyond the city limits. While 32% of the impacts accrue to the city of São Paulo, the remaining 68% benefit other municipalities in the metropolitan area (11%), in the State of São Paulo (12.0%) and in the rest of the country (45%).