The impact of urban public transportation evidence from the Paris region

We use the natural experiment provided by the opening and progressive extension of the Regional Express Rail (RER) between 1970 and 2000 in the Paris metropolitan region, and in particular the departure from the original plans due to budget constraints and technical considerations, to identify the causal impact of urban rail transport on firm location, employment and population growth. We apply a difference-in-differences method to a particular subsample, selected to minimize the endogeneity that is routinely found in the evaluation of the effects of transport infrastructure. We find that the RER opening caused a 8.8% rise in employment in the municipalities connected to the network between 1975 and 1990. While we find no effect on overall population growth, our results suggest that the arrival of the RER may have increased competition for land, since high-skilled households were more likely to locate in the vicinity of a RER station.