Subways and Road Congestion

American Economic Journal: Applied Economics 

Yizhen Gu, Chang Jiang, Junfu Zhang, and Ben Zou

Abstract

We study whether subways alleviate road congestion by examining 45 subway line launches in China and using detailed data on road speed. Our difference-in-differences estimation finds that in the first year after a subway line is launched, rush-hour speed on nearby roads increases by about 4%. The effect is most prominent in initially-congested roads and declines over distance to the new subway line. Evidence on road speed is corroborated with substitution patterns among modes of transportation. Using auxiliary data from Beijing, we calculate that the time savings for each automobile or bus commute from faster speed is worth 0.1 USD.