Urban Rail Transit and Labour Cost Stickiness: Evidence From China

ABSTRACT This study examines how improved commuting infrastructure affects labour cost stickiness. Leveraging the staggered operations of urban rail transit (URT) stations in China, we find that the operation of URT stations significantly reduces firms' labour cost stickiness, especially among firms with tighter labour supply, higher labour demand and poorer prior commuting conditions. The effect is primarily driven by changes in employee headcount rather than wage adjustments, leading to 4.5%–6.5% gains in labour‐related economic benefits. Our findings underscore the role of public infrastructure in shaping firms' cost behaviour and offer practical insights for policymakers and investors in developing economies.