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New Road Infrastructure: the Effects on Firms

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Author Info

  • Stephen Gibbons
  • Teemu Lyytikäinen
  • Henry Overman
  • Rosa Sanchis-Guarner

Abstract

This paper estimates the impact of road improvements on firm employment and productivity using plant level longitudinal data for Britain. Exposure to transport improvements is measured by changes in employment accessibility along the road network. These changes are constructed using data on employment for small geographical units, details of the main road network and of road construction schemes carried out between 1998 and 2007. We deal with the central problem of endogenous scheme placement by using changes due to new road links and exploiting the spatial detail in our data to focus on accessibility changes close to new schemes. We find substantial effects on employment and numbers of plants for small-scale geographical areas (electoral wards), but no employment response at plant level. This suggests that road construction affects firm entry and exit, but not the employment of existing firms. We also find effects on labour productivity and wages at the firm level, although these results are less robust.

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Bibliographic Info

Paper provided by Spatial Economics Research Centre, LSE in its series SERC Discussion Papers with number 0117.

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Date of creation: Sep 2012
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Handle: RePEc:cep:sercdp:0117

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Web page: http://www.spatialeconomics.ac.uk/SERC/publications/default.asp

Related research

Keywords: Productivity; employment; accessibility; transport;

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References

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  1. Paul Anderson & David Levinson & Pavithra Parthasarathi, 2011. "Accessibility Futures," Working Papers 000088, University of Minnesota: Nexus Research Group.
  2. Nathaniel Baum-Snow, 2010. "Changes in Transportation Infrastructure and Commuting Patterns in US Metropolitan Areas, 1960-2000," American Economic Review, American Economic Association, vol. 100(2), pages 378-82, May.
  3. Ahlfeldt, Gabriel M. & Wendland, Nicolai, 2011. "Fifty years of urban accessibility: The impact of the urban railway network on the land gradient in Berlin 1890-1936," Regional Science and Urban Economics, Elsevier, vol. 41(2), pages 77-88, March.
  4. Philippe Martin & Thierry Mayer & Florian Mayneris, 2011. "Spatial concentration and plant-level productivity in france," Sciences Po publications info:hdl:2441/c8dmi8nm4pd, Sciences Po.
  5. Straub, Stephane, 2008. "Infrastructure and development : a critical appraisal of the macro level literature," Policy Research Working Paper Series 4590, The World Bank.
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  8. BEHRENS, Kristian & LAMORGESE, Andrea R. & OTTAVIANO, Gianmarco I.P. & TABUCHI, Takatoshi, 2005. "Testing the ‘home market effect’ in a multi-country world," CORE Discussion Papers 2005055, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  9. Adelheid Holl, 2004. "Start-ups and relocations: Manufacturing plant location in Portugal," Economics of Governance, Springer, vol. 83(4), pages 649-668, October.
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  11. Roger Vickerman & Klaus Spiekermann & Michael Wegener, 1999. "Accessibility and Economic Development in Europe," Regional Studies, Taylor & Francis Journals, vol. 33(1), pages 1-15.
  12. Diego Puga, 2002. "European regional policies in light of recent location theories," Journal of Economic Geography, Oxford University Press, vol. 2(4), pages 373-406, October.
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  14. Chiara Criscuolo & Ralf Martin & Henry Overman & John Van Reenen, 2012. "The Causal Effects of an Industrial Policy," NBER Working Papers 17842, National Bureau of Economic Research, Inc.
  15. Michael L. Lahr & Rodrigo Duran & Anupa Varughese, 2004. "Estimating the Impact of Highways on Average Travel Velocities and Market Size," Urban/Regional 0403009, EconWPA.
  16. Nathaniel Baum-Snow, 2007. "Did Highways Cause Suburbanization?," The Quarterly Journal of Economics, MIT Press, vol. 122(2), pages 775-805, 05.
  17. Dave Donaldson, 2010. "Railroads of the Raj: Estimating the Impact of Transportation Infrastructure," NBER Working Papers 16487, National Bureau of Economic Research, Inc.
  18. Adelheid Holl, 2012. "Market potential and firm-level productivity in Spain," Journal of Economic Geography, Oxford University Press, vol. 12(6), pages 1191-1215, November.
  19. Chandra, Amitabh & Thompson, Eric, 2000. "Does public infrastructure affect economic activity?: Evidence from the rural interstate highway system," Regional Science and Urban Economics, Elsevier, vol. 30(4), pages 457-490, July.
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Citations

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Cited by:
  1. Rosa Sanchis-Guarner, 2012. "Driving Up Wages: The Effects of Road Construction in Great Britain," SERC Discussion Papers 0120, Spatial Economics Research Centre, LSE.
  2. Holl , Adelheid, 2013. "Firm location and productivity in Spain," Investigaciones Regionales, Asociación Española de Ciencia Regional, issue 25, pages 27-42.
  3. Corentin Trevien & Thierry Mayer, 2013. "Urban Public Transportation and Firm Location Choice Evidence from the Regional Express Rail of Paris Metropolitan area," ERSA conference papers ersa13p566, European Regional Science Association.
  4. Gabriel M. Ahlfeldt & Kristoffer Moeller & Nicolai Wendland, 2014. "Chicken or Egg? The PVAR Econometrics of Transportation," SERC Discussion Papers 0158, Spatial Economics Research Centre, LSE.

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