Title: Essays in Urban Economics
Description: Hundreds of billions of dollars are spent every year on developing new urban transport infrastructure (Hannon et al., 2020). At the same time, we know that the transportation network is a crucial determinant of the spatial organization of economic activity within a city. For this reason, it is important to understand the effects of investing in the transport infrastructure of a city on the spatial distribution of the residents of the city, as well as the welfare implications of these investments. In this dissertation, I will explore these questions in the context of a large transport infrastructure investment in the city of Buenos Aires, Argentina. I will then use this setting to study the political implications of these investments in transport infrastructure on the incumbent party that is in office when the investments are made. In the first chapter I study how improvements in the urban transport infrastructure affect the spatial sorting of residents with different levels of income and education within a city.

In particular, I study the effects of the construction of a bus rapid transit system (BRT) on the spatial reorganization of residents within the city of Buenos Aires, Argentina. To do so, I leverage an individual level panel data set of more than two million residents with which I can describe intra-city migration patterns at a very fine spatial scale. With these data, I employ an instrumental variables identification strategy to study how the increases in commuter market access produced by the new transportation network led to changes in the spatial sorting of residents in the city. In this chapter, I find evidence that the construction of the BRT increased the spatial segregation between high and low-skilled residents within the city. In the second chapter of the dissertation, I quantify the welfare effects of improving the urban transit infrastructure of a city once we take into account the patterns of spatial sorting found in Chapter 1. To do so, I develop a dynamic quantitative spatial equilibrium model of a city with heterogeneous workers.

I use this quantitative framework to quantify the welfare effects of the BRT system built in Buenos Aires. This framework, allows me to measure the average welfare gains for residents that were living near the BRT lines before these were built. I find that welfare gains were very similar between high- and low-skilled workers living in the same locations before the BRT system was built, but that gains were very different within skill levels across locations. Residents living near a BRT line in neighborhoods with the lowest share of high-skilled residents saw welfare gains close to 1% on average, while residents living near a BRT line in neighborhoods with the highest high-skilled share saw welfare gains around 0.5% on average. Finally, in the third chapter I study the political consequences of public investment in transport infrastructure for the incumbent party that is in office when the investment is made. In particular, I use the same BRT construction in the city of Buenos Aires to study its effects on the incumbent party’s vote share in subsequent elections after the BRT lines were built.

I use a staggered difference-in-difference estimation approach in order to capture the treatment effects relative to the time that each BRT line was either built or announced. I find that the incumbent party decreased its vote share in the districts closer to an opening BRT line in the election prior to the opening, but increased its vote share in the first election following the opening of a BRT line. However, when defining the treatment timing based on the year in which each line was announced, the effects of the BRT line on the incumbent party’s vote share appear to be negative and decreasing with the number of year from the announcement.