The most recent federal surface transportation legislation significantly increased the emphasis in U.S. public transit subsidy policy on capital projects, especially rail transit. This emphasis on capital investments arises largely from perceptions by electedof ficials that transit capital investments bring significant local economic (and, hence, political) benefit. While analyses of the economic effects of transit investments shouldpr operly emphasize their transportation effects, transit investments are more often judged in the political arena in terms of the expenditure effects of high-profile capital projects on local employment. This analysis uses a regional input-output model to show that, in general, the emphasis on transit capital expenditures is not an effective way to stimulate local employment. These findings call into question both the assumptions of many electedof ficials regarding employment effects of transit capital projects andthe perceptions of many transit officials regarding the relative benefits andcosts of capital andoper ating subsidies for transit.
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