The Empirical Methods And Results

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4 Empirical methods and results In this section we introduce the empirical models we use and the primary results. This study is designed based on the Difference-in-Difference (DD) approach, in order to eliminate the impact of confounding factors that affect all monitors before or after the subway opening. We first develop a basic DD model using distance as specification, and the new subway lines to the control group monitors that are located further than 15 km. 4.1 Standard Difference-in-Difference The basic Difference in Difference model we adopt in this study is where the outcome variable is , which is the log of Air Pollution Index measured by monitor i at time t. is an indicator variable that takes a…show more content…
Since the transportation system is a network system, no matter for the ground transportation or the underground rail transit, the monitors that are just a little further away may also capture the impact of subway opening on air pollution. Thus the monitors that are located in the buffer zone cannot form as valid counterfactuals for the treatment group. We also verify this argument by the graphs (See Appendix B) generated from the raw data, using different sets of control groups and showing the average API for treatment and control group during 60 weekdays before and after the subway opening. Figure 7 below shows the average environmental effect of subway openings when using monitors outside of 15km as control group. In order to make the graph reasonable and consistent with our specification, we control the weather factors and all the fixed effects for the data points, and draw the trend from the residuals. From this graph, we can have a general idea of the API trend for both groups pre-opening and post-opening without running the regressions. Overall, the difference between treatment and control group is obvious. The trend of API pre and post opening for the control group is constant, however, the trend for the treatment group differs from above the control (pre-opening) to below the control (post-opening), shows that there does exist an environmental beneficial effect of subway opening. The
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