Light Rail Effect on Neighborhood Incomes: A Case Study of Houston's METRO Rail



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Light Rail Transit (LRT) is often cited as a progressive policy targeted towards low-income communities in an attempt to alleviate labor-skill mismatch, create time cost savings, and increase income mobility. The literature finds mixed effects on the welfare of neighborhoods after light rail construction. This project investigates the effect LRT has on neighborhood outcomes, using Houston’s METRO Rail extensions. A difference-in-differences model is exploited to compare neighborhoods receiving access to a new rail extension between 2010 and 2017, against neighborhoods where rail extensions are planned but remain unbuilt. We estimate an $11,000 average increase in median income for neighborhoods near the new rail line development; however, most of the gains go to high-income neighborhoods, while low-income neighborhoods see their income decline. The observed income polarization may be explained by poverty magnet and gentrification effects occurring simultaneously across the treated neighborhoods. These results are robust to propensity matching control group selection.