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Spatial Effects of ‘Mill’ Closures: Does Distance Matter?

Author

Listed:
  • Arthur Grimes

    () (Motu Economic and Public Policy Research)

  • Chris Young

    () (Motu Economic and Public Policy Research)

Abstract

When small towns experience a major infrastructure shock, such as a ‘mill’ closure, the effects can be devastating. We analyse the effects of two major freezing works closures in New Zealand, in Patea (1982) and Whakatu (1986). These two examples provide an interesting comparison: Whakatu is located close to a city, while Patea is relatively isolated. We describe the impacts of these shocks on population, employment and house values in each town, relative to two sets of comparators. These descriptions allow us to contrast long-run trends and adjustment dynamics resulting from the differing locations of both towns. We find that both towns experience negative population and employment impacts; however, consistent with benefits of a near-city location, the effects on Whakatu are mainly temporary, whereas the effects on Patea are more permanent. Population age-groups respond very differently to the shocks, in ways that are consistent with homeownership being a factor stifling migration responsiveness in the face of a shock. The results have implications for regional development policy choices with respect to infrastructure location and also for programmes designed to stimulate homeownership.

Suggested Citation

  • Arthur Grimes & Chris Young, 2009. "Spatial Effects of ‘Mill’ Closures: Does Distance Matter?," Working Papers 09_12, Motu Economic and Public Policy Research.
  • Handle: RePEc:mtu:wpaper:09_12
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    File URL: http://motu-www.motu.org.nz/wpapers/09_12.pdf
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    More about this item

    Keywords

    Mill closures; rural infrastructure; homeownership;

    JEL classification:

    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population
    • R28 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Government Policy
    • R38 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Government Policy
    • R53 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Public Facility Location Analysis; Public Investment and Capital Stock
    • R58 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Regional Development Planning and Policy

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