The Economic Impacts of Subway Introduction on Products of Different Industry Sectors within Suburban Area

Abstract

Based on the traditional difference-in-differences (DID) model, this research establishes a two-stage DID model to investigate the impact of a subway on the suburban economy. A parallel trend analysis and placebo test are applied respectively to verify the robustness of the estimated results regressed by the two-stage DID model. The heterogeneous effects of a subway announcement and opening on different industry sectors are further analyzed. The study results indicate that the introduction of a subway is able to significantly promote the development of the suburban economy. Moreover, the impacts of a subway announcement and opening on different industry sectors are heterogeneous.