Estimating commuter benefits of a new transit system: Evidence from New York City’s ferry service

Abstract

This paper estimates the impact of a new transit system on worker outcomes, accounting for endogenous worker decisions. I examine the phased opening of New York City’s commuter ferry system. I find evidence of a small but significant shift in commuting flows, towards routes with ferry service, driven by middle-to-high-income workers. I then propose and estimate a novel structural neighborhood choice model that recovers workers’ valuation of ferry service and the aggregate effects of the system on employment. Higher-income workers display a stronger preference for the ferry. Ferry routes also match the location preferences of higher-income workers, allowing these workers to capture almost all direct benefits from the new system. Differing home and work location preferences across income groups largely determine who benefits from a new transit system.