Mind the Income Gap: How Public Transit Shapes Labor Market Inequality

Abstract. This paper examines the socioeconomic impacts of the Expo Line Phase II extension in Los Angeles, using a Difference-in-Differences (DiD) framework with microdata from the IPUMS USA database. I compare areas directly affected by the new transit line to adjacent control areas, focusing on changes in public transit usage, labor market outcomes, and indicators of gentrification. Results suggest a substantial increase in public transit usage and a weakly significant decline in unemployment rates in treated areas relative to controls. Additionally, monthly rents rose significantly, accompanied by a modest increase in the share of college-educated residents, suggesting early signs of gentrification. Effects are estimated relative to a 2013–2015 pre-treatment baseline, and pre-trend validity is confirmed through a placebo regression using only pre-treatment years. These findings contribute to understanding how major public transit investments can reshape local labor markets and urban inequality.

JEL: R41, R23, J61, J64, R21