The effects of transport infrastructure on regional economic development: A simulated spatial overlapping generations model with heterogenous skill
AbstractAs a result of public investment, lower freight transport costs tend to translate into lower local price indices and are associated with equilibria characterized by higher output and consumption. In this paper we investigate an additional effect to these trade gains, namely the gains from better spatial matching in the labor market. We simulate a two-region Spatial OLG model in which agents are heterogeneous in terms of skill. Under repeated simulation experiments, we show that, for high household relocation frictions, the possibility of interregional commuting can be seen as an alternative way to realize the potential matching effects. For high levels of skill heterogeneity and a plausible parametric input, a steady state in which labor matching is realized through commuting can be associated with up to 10% higher per capita output, compared to the one with homogenous labor, in which only gains from trade are feasible.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoArticle provided by Center for Transportation Studies, University of Minnesota in its journal The Journal of Transport and Land Use.
Volume (Year): 5 (2012)
Issue (Month): 2 ()
Economic development; Trade; Freight transportation; Regional economy;
Find related papers by JEL classification:
- R40 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - General
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Michel P. & de la Croix, D., 1999.
"Myopic and Perfect Foresight in the OLG Model,"
99a35, Universite Aix-Marseille III.
- Michel, Philippe & de la Croix, David, 1999. "Myopic and perfect foresight in the OLG model," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 1999014, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
- Abdel-Rahman, H.M. & Wang, P., 1993.
"Toward a General-Equilibrium Theory of Core-Periphery System of Cities,"
10-93-29, Pennsylvania State - Department of Economics.
- Abdel-Rahman, Hesham M. & Wang, Ping, 1995. "Toward a general-equilibrium theory of a core-periphery system of cities," Regional Science and Urban Economics, Elsevier, vol. 25(4), pages 529-546, August.
- Rietveld, Piet, 1989. "Infrastructure and Regional Development: A Survey of Multiregional Economic Models," The Annals of Regional Science, Springer, vol. 23(4), pages 255-74.
- Shapiro, Carl & Stiglitz, Joseph E, 1984. "Equilibrium Unemployment as a Worker Discipline Device," American Economic Review, American Economic Association, vol. 74(3), pages 433-44, June.
- Rioja, Felix K., 1999. "Productiveness and welfare implications of public infrastructure: a dynamic two-sector general equilibrium analysis," Journal of Development Economics, Elsevier, vol. 58(2), pages 387-404, April.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Arlene Mathison).
If references are entirely missing, you can add them using this form.