cover image: Road Capacity, Domestic Trade and Regional Outcomes (English)

20.500.12592/7mmq07

Road Capacity, Domestic Trade and Regional Outcomes (English)

13 Sep 2021

What is the impact on intranational trade and regional economic outcomes when the quality and lane capacity of an existing paved road network is expanded significantly? This paper investigates this question for the case of Turkey, which undertook a large-scale public investment in roads during the 2000s. Using spatially disaggregated data on road upgrades and domestic transactions, the paper estimates a large positive impact of reduced travel times on trade as well as local manufacturing employment and wages. A quantitative exercise using a workhorse model of spatial equilibrium implies heterogeneous effects across locations, with aggregate real income gains reaching 2-3 percent in the long run. Reductions in travel times increased the local employment-to-population ratio but had no effect on local population. The model is extended by endogenizing the labor supply decision to capture this finding. The model-implied elasticity of employment rates to travel time reductions captures about one-third of the empirical elasticity.
female labor force participation public investment program gender wage gap rates of return elasticity of substitution interstate highway system development research group infrastructure and growth types of road quality of data central government's budget reduction in travel aggregate productivity growth department of economics employment and wage data average travel time estimation of equation share of employment changes in trade increase in capacity travel time saving local labor market european bank for reconstruction elasticity of labor supply expansion of export long-run equilibrium female labor market participation labor market opportunities sum of money change in population use of travel time share of trade impact of road investments in transport infrastructure class of model labor supply decisions transport by air national trunk highway system labor supply elasticity fatalities per kilometer indirect utility function transport intensity responsiveness of labor supply

Authors

Cosar,Kerem, Demir,Banu, Ghose,Devaki, Young,Nathaniel Virgil C

Disclosure Date
2021/09/13
Disclosure Status
Disclosed
Doc Name
Road Capacity, Domestic Trade and Regional Outcomes
Originating Unit
DECRG: Trade & Intl. Integration (DECTI)
Published in
United States of America
Series Name
Policy Research working paper; no. WPS 9772;
Total Volume(s)
1
Unit Owning
Off of Sr VP Dev Econ/Chief Econ (DECVP)
Version Type
Final
Volume No
1

Files

Tables

All