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Rural Highway Expansion and Economic Development: Impacts on Private Earnings and Employment

  • Michael Iacono
  • David Levinson

    ()

    (Nexus (Networks, Economics, and Urban Systems) Research Group, Department of Civil Engineering, University of Minnesota)

With the interstate system substantially complete, the majority of new investment in highways is likely to take the form of selective capacity expansion projects in urban areas, along with incremental expansions and upgrades to expressway or freeway standards of existing intercity highway corridors. This paper focuses specifically on the latter type of project, rural highway expansions designed to connect smaller outstate cities and towns, and examines their effects on industry-level private earnings and local employment. We examine three case study projects in rural Minnesota and use panel data on local earnings and employment to estimate the impacts of the improvements. Our results indicate that none of the projects studied generated statistically significant increases in earnings or employment, a finding we attribute to the relatively small time savings associated with the projects and the maturity of the highway network. We suggest that for rural highway expansion projects, as with other types of transportation projects, user benefits should be a primary evaluation criterion rather than employment impacts.

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File URL: http://nexus.umn.edu/Papers/RuralExpansion.pdf
File Function: First version, 2012
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Paper provided by University of Minnesota: Nexus Research Group in its series Working Papers with number 000101.

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Date of creation: 2012
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Publication status: Published in working paper
Handle: RePEc:nex:wpaper:ruralexpansion
Contact details of provider: Postal: Dept. of Civil Engineering, 500 Pillsbury Drive SE, Minneapolis, MN 55455
Phone: +01 (612) 625-6354
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Web page: http://nexus.umn.edu

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  1. Keeler, Theodore E. & Ying, John S., 1988. "Measuring the benefits of a large public investment : The case of the U.S. Federal-aid highway system," Journal of Public Economics, Elsevier, vol. 36(1), pages 69-85, June.
  2. Shirley, Chad & Winston, Clifford, 2004. "Firm inventory behavior and the returns from highway infrastructure investments," Journal of Urban Economics, Elsevier, vol. 55(2), pages 398-415, March.
  3. Holtz-Eakin, Douglas, 1994. "Public-Sector Capital and the Productivity Puzzle," The Review of Economics and Statistics, MIT Press, vol. 76(1), pages 12-21, February.
  4. Rephann, Terance & Isserman, Andrew, 1994. "New highways as economic development tools: An evaluation using quasi-experimental matching methods," Regional Science and Urban Economics, Elsevier, vol. 24(6), pages 723-751, December.
  5. David Aschauer, 1988. "Is public expenditure productive?," Staff Memoranda 88-7, Federal Reserve Bank of Chicago.
  6. Teresa Garcia-MilĂ  & Therese J. McGuire & Robert H. Porter, 1993. "The effect of public capital in state-level production functions reconsidered," Economics Working Papers 36, Department of Economics and Business, Universitat Pompeu Fabra.
  7. John Fernald, 1997. "Roads to prosperity? assessing the link between public capital and productivity," International Finance Discussion Papers 592, Board of Governors of the Federal Reserve System (U.S.).
  8. Piyapong Jiwattanakulpaisarn & Robert B. Noland & Daniel J. Graham, 2012. "Marginal Productivity of Expanding Highway Capacity," Journal of Transport Economics and Policy, London School of Economics and University of Bath, vol. 46(3), pages 333-347, September.
  9. 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.
  10. JunJie Wu & Munisamy Gopinath, 2008. "What Causes Spatial Variations in Economic Development in the United States?," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 90(2), pages 392-408.
  11. Steven C. Deller & Tsung-Hsiu (Sue) Tsai & David W. Marcouiller & Donald B.K. English, 2001. "The Role of Amenities and Quality of Life In Rural Economic Growth," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 83(2), pages 352-365.
  12. Piyapong Jiwattanakulpaisarn & Robert B. Noland & Daniel J. Graham & John W. Polak, 2009. "Highway infrastructure and state-level employment: A causal spatial analysis," Papers in Regional Science, Wiley Blackwell, vol. 88(1), pages 133-159, 03.
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