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Liberalizing passenger rail: The effect of competition on local unemployment

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  • Badura, Ondřej
  • Melecký, Aleš
  • Melecký, Martin

Abstract

Competitive passenger rail can help people access new or better jobs or bring new business opportunities. This paper studies the wider economic impacts on local unemployment of the liberalized passenger rail between Ostrava, the third-biggest city in the Czech Republic, and Prague, its capital. The local impacts are estimated at the LAU 1 level (administrative districts) using the event study and difference-in-differences method. The liberalization motivated the entry of two new private providers to compete with the public provider. The resulting competition in ticket prices, the number of connections, and service quality had a strong beneficial effect on labor market connectivity and business opportunities in connected districts. It significantly reduced unemployment in the districts along the rail line compared with the control districts. The effect, however, weakens with the level of urbanization of the treated district and with the distance from the rail. It could partly be transmitted through better skill matching on the back of higher inward and outward migration, higher firm entry and lower firm exit from the local market, as well as more business opportunities for self-employed entrepreneurs.

Suggested Citation

  • Badura, Ondřej & Melecký, Aleš & Melecký, Martin, 2023. "Liberalizing passenger rail: The effect of competition on local unemployment," Economics of Transportation, Elsevier, vol. 36(C).
    • Handle: RePEc:eee:ecotra:v:36:y:2023:i:c:s2212012223000345
    DOI: 10.1016/j.ecotra.2023.100334
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    More about this item

    Keywords

    Competition; Difference in differences; Liberalization; Passenger transport; Railways; Local unemployment; Czech Republic; EU;
    All these keywords.

    JEL classification:

    • J6 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers
    • L4 - Industrial Organization - - Antitrust Issues and Policies
    • R1 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics
    • R4 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics

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