Metros, agglomeration and displacement. Evidence from London Csaba G. Pogonyi 1 , Daniel J. Graham 2 , Jose M. Carbo 3 Imperial College London, United Kingdom Abstract This paper uses data on the location and movement of establishments and employment in London to estimate the impact of a metro opening on the spatial distribution of economic activity. In addition to fixed effect methods, we employ a planned-route instrumental variables methodology which uses planned but abandoned metro alignments. We find that areas within walking distance to stations experience a positive effect, whereas areas further but still within 2000 meters experience a significant negative impact. Our results provide empirical evidence for the model of Redding and Turner (2015) as areas close to the transport scheme but not subject to it are worse off than areas further away. The results suggest no growth, only displacement on the local level: the metro shifted economic activity closer to the stations. Keywords: urban economics, transport economics, displacement 1. Introduction The 21st century may be the century of metros. 55% of the world’s pop- ulation resides in urban areas in 2018, and the United Nations projects this to reach 68% by 2050 (United Nations Department of Economic and Social Affairs, 2018). This growing urban population needs efficient, high capacity public transportation systems. 157 cities had metro systems in the world in 2015, and 40% of all the metro infrastructure had been built since 2000 (UITP, 2015). While the majority of new systems are in the developing 1 c.pogonyi16@imperial.ac.uk, corresponding author 2 d.j.graham@imperial.ac.uk 3 j.carbo-martinez@imperial.ac.uk Preprint submitted to Regional Science and Urban Economics June 13, 2021