Do public transport investments promote urban economic development? Evidence from bus rapid transit in Bogotá, Colombia

In 2000, the city of Bogotá, Colombia embarked on a grand land use and transportation system experiment. The transformation of Bogotá included building the TransMilenio Bus Rapid Transit (BRT) system, a city-wide system that offers speed and convenience similar to that of an underground metro. TransMilenio is widely regarded as a success, and cities around the world are planning or building similar systems. In this paper, we use a repeated cross-section labor market dataset to assess whether access to the new BRT system affects the incomes of those who live in station area neighborhoods. Our results indicate that the opening of the TransMilenio system was associated with increased income for those living near—but not immediately adjacent to—trunk line stations. This relationship is strongest in the lower and middle-income range. There are at least two possible explanations for this result: 1. existing residents earn higher wages, or 2. higher income workers move to the neighborhood. Our data do not allow us to distinguish clearly between them, but available evidence suggests that much of the effect is likely due to relocation. Our results stand in contrast to prior work, which has largely suggested that improvements in public transit will tend to reduce wages in station areas.