Impacts of Urban Railway Investment on Regional Economies: Evidence from Tokyo using Spatial Difference-in-Differences Analysis

This study empirically analyzes the effects of urban railway investment on regional population density, employment density, and land price using the spatial difference-in-differences (DID) approach, employing a sociodemographic and socioeconomic dataset in 2,843 zones in the Tokyo Metropolitan Area from 2000 to 2010. A spatial-lag model and a spatial-error model, in addition to an ordinary least square model under the framework of the DID approach, are employed in the empirical analyses. The results show that investment in urban railway lines was in areas with lower population densities and higher employment densities. The urban railway investment significantly positively influenced land price but insignificantly influenced population and employment densities. Land price was positively influenced by population and employment densities. The analysis suggests that introduction of the railway directly affected the land price via anticipation of expected future development, rather than an indirect effect via increased population and employment densities. Finally, the policy implications regarding transit-oriented development are discussed, including strategic residential development in line with the railway investment and the integrated development of business clusters following railway investment to enhance the economic effects of railway investments.