Why is poverty high near subway stops?

Elegant and accessible new working paper by Edward Glaeser:

...the rich and the poor use different transportation technologies (LeRoy and Sonstelie, 1983). If the rich drive and the poor take public transportation, then the rich can have lower costs of commuting per mile even if their time is worth more. Glaeser, Kahn and Rappaport (2007) find that access to public transportation does seem to explain the decisions of the poor to live in urban centers. Indeed, poverty rates even seem to rise in areas that are close to new subway stops. The connection between public transportation and poverty is not a problem, but rather a reflection of the valuable role that public transportation plays in serving and attracting the poor.

Also explains why house prices fall with distance from the city center (HINT: in long run equilibrium, you have to be compensated for travel costs.)

Finally, Glaeser opines on whether to rebuild New Orleans:

The economists’ desire to put people first might seem obvious, but it is often in conflict with much place-based urban policy. For example, regional policies in Europe, such as the European Union’s spending on infrastructure for poorer areas like the Mezzogiorno and in the U.S., such as the Appalachian Regional Commission, are classic place-based policies that aim to make particular regions wealthier. In the wake of Hurricane Katrina, many advocates for New Orleans called for hundreds of billions of dollars to be spent so that the city would come back.

The economics approach to public policy pushes us to ask whether this money would be better spent on people, rather than place based policies. For example, would 500,000 residents of New Orleans be better off with 200,000 dollars apiece or 100 billion dollars worth of government infrastructure.