EQ Vol.10: Los Angeles Metro Rails– An Asset or a Liability?

Contributing Writer: Fatima Ali | May, 2020

Throughout the mid-1990s to the early 2000s, Los Angeles experienced a massive population growth, creating traffic congestion in the L.A. highway system. Tis provided an incentive for lawmakers and city developers to find a method of transportation that would allow a solution to solve the problem of congested highways, while also ensuring that residents had easy and affordable access to transportation. As a result, Los Angeles implemented a Metro Rail system that allowed residents to commute efficiently throughout greater Los Angeles. Metro Rails were found to be a useful public investment. However, developers did not take into account the effect the rail system would have on the surrounding communities and neighborhoods.

Aaron Pawlinski, an undergraduate student at the University of Wisconsin Madison, researched the impacts of the Los Angeles Metro Rail system on the surrounding neighborhoods. Using a differences-in-differences (DID) regression model, he analyzed the effects of the metro rails, placing special emphasis on whether it generated neighborhood change. Pawlinski defined neighborhood change as a change in the income and racial dynamics of a region. At the end of the study, Pawlinski found that the Green, Blue, Purple, and Gold lines did not have any effect on neighborhood change. However, his study had several limitations. Pawlinski stated that the parallel trend assumption may not hold in all cases, that not all L.A. metro lines were studied. Furthermore, he believes that yearly observations and a DID model allowing for multiple treatment periods could provide a better estimate of the combined effect of all lines.

“The Metro Rails enjoy significant internal economies of scale, and hence are constructed only where the demand is very high.” –Professor Alina Arefeva.

There are many benefits to a rail system that lawmakers and city planners aimed to apply as they began the construction of railway systems in Los Angeles. For instance, it was important to increase efficiency by offsetting transportation costs and the time it takes for residents to travel to various parts of Los Angeles, especially hard to reach areas. It creates price competition amongst firms since consumers do not have to rely as much on local producers in order to buy various goods. However, it exposes residents to gentrification. For the purpose of this paper, gentrification is defined as social consequences of major public or private investment. Pawlinski provides a more specific definition of gentrification: “gentrification is viewed as the replacement of a minority or low-income populations in a neighborhood with non- minority or affluent populations preceded by increased cost of living and significant public or private investment.”Author Ruth Glass explains one of the down-sides of gentrification, “Once this process of ‘gentrification’ starts in a district it goes on rapidly until all or most of the original working-class occupiers are displaced and the whole social character of the district is changed”.1 Tis process of gentrification is especially evident in Los Angeles, one of the most diverse cities in the United States.

Pawlinski found that no metro line he tested had a significant effect on the surrounding areas. Te only significant factor that somewhat fluctuated was the poverty level. He expected that the population density would increase due to residents wanting to move closer to the metro rails, however, it did not.

Another finding was that the average income and rent were unchanged after the creation of the metro rail system. Te average rent also appeared unaltered which further showed that the metro line was not a large force for neighborhood change.

In order to further test the effects of metro rails on large cities, and specifically the impacted neighborhoods, it is important to continue studies not only in L.A. but also in other major cities such as New York and Chicago. Many major cities in the United States have transit rail systems or are in the process of renovating or building them. Differences in income and racial compositions will definitely play a role in the effect of metro lines in the near future, but zoning laws and urban layouts will also play a role in the creation of new metro rail systems. Pawlinski found that neighborhood change is most likely not caused by a single investment, but rather by a series of public and private investments. In the future, it is important to examine the effects of zoning laws, legislation, city layout, and demographics.

Tere are several ways neighborhood change can occur, many of which were not tested in this study. For instance, the composition of neighborhoods and the investments that shape them have large impacts on the economics of cities. City legislation and investments can affect social mobility and economic efficiency. Lastly, the effect of metro rail systems on gentrification can be further studied, especially as more people and their families migrate to larger cities.

When asked about the future of metro rails around the world and especially in the United States, Professor Alina Arefeva of the University of Wisconsin School of Business states that “Te Metro Rails enjoy significant internal economies of scale, and hence are constructed only where the demand is very high.” Metro rail systems are suitable for bigger cities such as Los Angeles and Chicago, as they can reduce transportation costs, however, a metro rail system may not be the most effective method of transportation in a smaller city such as Madison with a population that is too small to justify construction. Madison definitely needs an expanded transportation system but increasing bus lines and routes can adequately transport people between Madison and other areas within Dane County.

There are also many issues that developers need to think about before building metro rail systems in large cities. Professor Arefeva stated that a question that developers should be asking is, “How can we make sure that the metro line can actually be constructed under the real estate developments that already exist?” It is likely that property values will go up near the metro line due to residents wanting more access to it; however, property values may decrease rapidly as well due to noise and pollution from building the system. Overall, it is important for developers to run a cost-benefit analysis before beginning the process of developing metro rail systems in large cities. In Los Angeles, residents have found that the metro rail system provides an efficient and affordable form of transportation. However, residents of other cities can respond differently, and the reaction can be negative when it comes to the implementation of a large metro rail system.


1. Glass, R. (1964). London: Aspects of change. London.

Read the full article at: https://issuu.com/uwequilibrium.com/docs/equilibrium_2020_web/17