Does Federal Transit Funding Improve Local Labor Markets? Evidence from a Population Threshold

Abstract

The Federal Transit Administration distributes over \$5 billion annually through population-based formula grants, yet causal evidence on whether these grants improve outcomes is limited. I exploit a sharp statutory discontinuity: urbanized areas with populations of 50,000 or more qualify for FTA Section 5307 grants, while areas below this threshold do not. Using a regression discontinuity design with 2010 Census population and 2016–2020 ACS outcomes, I find precise null effects. Point estimates are near zero for transit ridership, employment, vehicle ownership, and commute times, with confidence intervals ruling out effects larger than 1 percentage point. The results pass standard validity tests and hold across bandwidths and at placebo thresholds. Marginal eligibility for federal transit funding does not detectably improve local outcomes, suggesting that population-based thresholds may not effectively target resources where they can generate benefits.