Metro and urban growth: Evidence from China

We investigate the effects of metro systems on urban growth in China. Using a difference-in-differences combined with propensity score matching framework, we find that metro systems have an economically significant positive effect on the urban GDP growth rate and that this effect is much larger for megacities with permanent populations of more than 6.15 million. Meanwhile, cross-city metro operations tend to increase economic concentrations in larger cities and expand GDP inequalities between cities connected by a cross-city metro. Our mechanism analyses further corroborate that a higher metro density has a positive effect on urban employment growth and a negative effect on the average wage of employees, but this does not improve urban total factor productivity (TFP), suggesting that a metro system is more likely to provide consumption amenities and employment access than it is to provide production amenities.