Spatial Mismatch and Youth Unemployment in US Cities: Public Transportation as a Labor Market Institution

Spatial mismatch between homes and jobs within a city can create unemployment despite the presence of unfilled jobs. This is especially problematic among young people who have limited transportation options and high rates of joblessness. Car ownership is a possible solution to spatial mismatch, but private vehicles are expensive and involve negative externalities. Public transportation provides an alternative infrastructure that reduces structural unemployment by matching supply and demand. Using longitudinal models of public transportation in the 95 largest US cities between 2000 and 2010, we test whether better public transit services reduce youth unemployment. Public transportation systems can serve as a labor market institution, but there are two worlds of public transportation in American cities. Improvements in public transit are mostly beneficial in cities that are already less dependent on private automobiles. Path dependence in transportation design means that some cities see little benefits to incremental investments in public transit.