Transit-induced Agglomeration and Employment Opportunity: A Spatial Econometric Analysis of Skill- and Industry-specific Job Clusters in Philadelphia, PA

The impacts of transit improvements on agglomeration economies have been studied repeatedly in regional science and urban planning. However, none of the studies focus specifically on the effect agglomeration associated with transit has on socially and economically disadvantaged groups. To fill this gap, this study primarily sheds light on the issue of low-skilled labor force’s opportunities related to transit-induced economic development. More specifically, we investigate the heterogeneous impacts of transit-induced agglomeration on job opportunities for employees with different skill levels and in different service sectors in Philadelphia, PA. For this study, we chose Location Quotients (LQ) to measure first skill- and then industry-specific agglomeration. We estimate spatial econometric models to analyze direct and spillover impacts of transit-induced agglomeration on job opportunities for low- and high-skilled jobs and different industries. Our results show that transit-induced agglomeration has a negative direct effect on low-skilled jobs, and a positive direct effect on high-skilled jobs. These results imply that the economic development revitalization strategy heavily favored high-tech and knowledge-based firms leading to a concentration of high-skilled workers and an underrepresentation of low-skilled workers in the urban core areas. This suggests less accessibility to job opportunities for transit-dependent low-skilled workers. The presence of positive spatial spillover effects of low-skilled workers further indicates that the concentration of economic activities around transit stations absorbs economic resources from neighboring areas. Overall, the revitalization projects have caused uneven and inconsistent local economic conditions across the entire metropolitan area.