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New Road Infrastructure: the Effects on Firms

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  • 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.

Suggested Citation

  • Stephen Gibbons & Teemu Lyytikäinen & Henry Overman & Rosa Sanchis-Guarner, 2012. "New Road Infrastructure: the Effects on Firms," SERC Discussion Papers 0117, Spatial Economics Research Centre, LSE.
  • Handle: RePEc:cep:sercdp:0117
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    Cited by:

    1. Gabriel M. Ahlfeldt & Kristoffer Moeller & Nicolai Wendland, 2015. "Chicken or egg? The PVAR econometrics of transportation," Journal of Economic Geography, Oxford University Press, vol. 15(6), pages 1169-1193.
    2. Adelheid Holl, 2014. "Location, accessibility and firm-level productivity in Spain," Chapters,in: Accessibility and Spatial Interaction, chapter 10, pages 195-210 Edward Elgar Publishing.
    3. Kelly, Charlotte & Laird, James & Costantini, Stefano & Richards, Phil & Carbajo, José & Nellthorp, John, 2015. "Ex post appraisal: What lessons can be learnt from EU cohesion funded transport projects?," Transport Policy, Elsevier, pages 83-91.
    4. Fretz, Stephan & Parchet, Rapha�l & Robert-Nicoud, Fr�d�ric, 2017. "Highways, Market Access, and Spatial Sorting," CEPR Discussion Papers 12437, C.E.P.R. Discussion Papers.
    5. Mayer, Thierry & Trevien, Corentin, 2015. "The Impacts of Urban Public Transportation: Evidence from the Paris Region," CEPR Discussion Papers 10494, C.E.P.R. Discussion Papers.
    6. Holl , Adelheid, 2013. "Firm location and productivity in Spain," INVESTIGACIONES REGIONALES - Journal of REGIONAL RESEARCH, Asociación Española de Ciencia Regional, issue 25, pages 27-42.
    7. Claudia N. Berg & Uwe Deichmann & Yishen Liu & Harris Selod, 2017. "Transport Policies and Development," Journal of Development Studies, Taylor & Francis Journals, vol. 53(4), pages 465-480, April.
    8. Rosa Sanchis-Guarner, 2012. "Driving Up Wages: The Effects of Road Construction in Great Britain," SERC Discussion Papers 0120, Spatial Economics Research Centre, LSE.
    9. Duranton, Gilles, 2015. "Roads and trade in Colombia," Economics of Transportation, Elsevier, pages 16-36.
    10. Arthur Grimes & Eyal Apatov & Larissa Lutchmann & Anna Robinson, 2014. "Infrastructure?s Long-Lived Impact on Urban Development: Theory and Empirics," ERSA conference papers ersa14p178, European Regional Science Association.
    11. Mayer, Thierry & Trevien, Corentin, 2017. "The impact of urban public transportation evidence from the Paris region," Journal of Urban Economics, Elsevier, vol. 102(C), pages 1-21.
    12. Wu, Wenjie, 2015. "Rail access and subjective well-being: Evidence from quality of life surveys," Journal of Comparative Economics, Elsevier, pages 456-470.
    13. 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.
    14. Ana Isabel Moreno-Monroy & Frederico Ramos, 2015. "The impact of public transport expansions on informality: the case of the São Paulo Metropolitan Region," ERSA conference papers ersa15p1551, European Regional Science Association.
    15. repec:wfo:monber:y:2017:i:11:p:855-864 is not listed on IDEAS
    16. repec:eee:trapol:v:60:y:2017:i:c:p:1-9 is not listed on IDEAS
    17. Elodie Djemai, 2017. "Roads and the Spread of AIDS in Africa," Working Papers DT/2017/16, DIAL (Développement, Institutions et Mondialisation).
    18. Stephen Gibbons & Wenjie Wu, 2017. "Airports, Market Access and Local Economic Performance: Evidence from China," SERC Discussion Papers 0211, Spatial Economics Research Centre, LSE.
    19. Volpe Martincus, Christian & Carballo, Jerónimo & Cusolito, Ana, 2017. "Roads, exports and employment: Evidence from a developing country," Journal of Development Economics, Elsevier, pages 21-39.
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    More about this item

    Keywords

    Productivity; employment; accessibility; transport;

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

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