Does rail transit access affect firm dynamics? Analysis of firm births and closures in Maryland, USA

Abstract

Firm birth and firm closure are two interrelated dynamics relevant to measuring economic growth, yet most studies focus on firm birth only. Public transportation infrastructure may facilitate firm birth, but it may also avert firm closure through improved accessibility that can consequently lead to increased local density hence agglomeration economies. This study analyzes firm births and firm closures using the National Establishment Time Series (NETS) panel data from Maryland from 1991 to 2009. By examining both birth and closure patterns, this study estimates the likelihood of firm retention for areas in proximity to passenger rail stations of multiple levels of maturity, while controlling for a number of potentially confounding factors. Positive and statistically significant relationships are found between proximity to the passenger rail stations and the rates of firm births in Maryland, regardless of differences in the level of maturity of stations. From 1991 to 2009, areas within close proximity to passenger rail stations in Maryland experienced a wide range of rates of growth in firm density, depending on the year of station opening. The results suggest that well after the introduction of rail stations, areas near passenger rail stations gain belated economic benefits shown by higher likelihood of firm retention around the mature rail stations opened before 1990. In comparison, areas near the less mature stations that opened after 1990 had predominantly lower likelihood of firm retention. Planners and policymakers should be proactive in directing development near rail stations by adopting a variety of measures and policies that support or are at least consistent with transit-oriented development (TOD).