“Why Do the Poor Live in Cities? The Role of Public Transportation”, 2008 ():
More than 19% of people in American central cities are poor. In suburbs, just 7.5% of people live in poverty. The income elasticity of demand for land is too low for urban poverty to come from wealthy individuals’ wanting to live where land is cheap (the traditional explanation of urban poverty). A large income elasticity for land exists only because the rich eschew apartment living, and that elasticity is still too low to explain the poor’s urbanization. The urbanization of poverty comes mainly from better access to public transportation in central cities.
…We follow 1983 and argue that the primary reason for central city poverty is public transportation. The large financial costs of automobiles make them unattractive to the poor; public transportation offers a time-intensive alternative that will be more appealing to those with low incomes. Public transportation relies on high densities, so if inner cities have public transportation and suburbs do not, then this can explain the urbanization of the poor.3 This view does not require a monocentric model. If suburbs are a complete urban environment built around the car, and inner cities are rival areas built around public transportation, then it is easy to understand why the poor live and work in inner cities.
After revisiting the multiple mode model in §3, §4 calibrates the model to see whether it can explain the centralization of the poor. We use data from the 2001 National Household Transportation Survey to estimate the time costs of taking public transportation and driving. We estimate that public transportation is two to 3× more important than the income elasticity of demand for land in explaining the central location of the poor. Indeed, including transport modes suggests that we should always expect the poor to centralize, at least at US levels of income inequality.
…Our first regression in Table 3 shows results for walking which we include for completeness. Commuters who walk to work take 10.2 minutes per mile. We suspect walkers of overestimating their athleticism. The second regression shows results for automobile users. Car travel takes about 1.6 minutes per mile, which suggests an average speed of 37.5 miles per hour. The fixed time cost of driving is 5.6 minutes, which presumably reflects walking to and from parking spots. Given its large sample size, we are particularly confident about this automobile regression. The 3rd and 4th regressions show results for public transportation. The fixed time costs are much higher than in the case of cars. We estimate a 22.2-minute fixed cost associated with bus travel and an 18.4-minute fixed cost associated with subway travel. The subway results primarily reflect conditions in New York City. The time cost for bus travel is estimated at 2.95 minutes per mile (~20 miles per hour), and 3.32 minutes per mile by subway (~18 miles per hour). Buses and subways are slower than cars, but the biggest time cost difference comes in the fixed costs of using public transportation. These estimates suggest a difference in the fixed time cost of a trip of about 15 minutes per trip. If the annual financial cost of owning a car was car costs $2,809.64$2,0002008 per year or $5.62$42008 per commute (50 weeks and 8 commutes per week), and public transportation cost or $2.81$22008 per commute, then someone close to the city center who took 250 trips per year would optimally drive if and only if the opportunity cost of time was greater than 8 dollars per hour. This cutoff seems to suggest both that WRichF > C and that C − WPoorF could be a large positive number. These numbers also suggest that a 100% increase in income from $14.05$102008 to $28.1$202008 per hour should be associated with a massive shift from public transportation to driving.