Public transport expansions and informality

The São Paulo Metropolitan Region faces an acute deficit of public transport infrastructure, making commutes long and costly for workers. The difficulty in accessing jobs centers may translate into higher informality rates, since workers may be discouraged to take formal jobs, miss on information about job opportunities, or even be discriminated against according to  their place of residence.

Usuários lotam a plataforma da estação Sé do Metrô de São Paulo, sentido Corinthians-Itaquera

Sé metro station, Corinthians-Itaquera direction. Source: Viatrolebus

In a new working paper co-authored with Frederico R. Ramos, we estimate the impact of public transport expansions on local informality rates. An important part of the explanation for the large deficit in transport infrastructure are chronic project delays. We use this information in our methodological approach to compare areas that received new transport infrastructure with areas where new train/metro stations or bus corridors were planned, but eventually not built.

Example of areas with and without a bus corridor

Example of areas with (left) and without (right) a bus corridor. Source: Google Earth

After controlling for endogenous selection, we find this impact to be significant: informality rates decreased on average 16% faster in areas that received new transport infrastructure, compared to areas that faced project delays.

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