The Economic Effects of Bus Transit in Small Cities

This research investigates how public transit affects economic outcomes in counties with small to medium-sized cities. Our objectives are to answer: Do counties with bus transit have lower growth in transfer payments such as food stamps, Temporary Aid to Needy Families (TANF), or higher income growth, employment growth, and population growth? Public transit is commonly viewed as a social service; this analysis explores the economic impact of this public investment. We find that relative to counties without bus transit, counties with bus systems have significantly lower unemployment rates, lower growth in family assistance, lower growth in food stamp payments, and higher population and employment growth. Yet the poverty rate is higher in counties with bus transit systems and the effect on income is ambiguous. The positive impact on job access which reduces payments for family assistance and food stamps is tempered by lack of discernable effects on income likely driven by supply side effects in the labor market.