New Road Infrastructure: The Effects on Firms

63 Pages Posted: 25 Apr 2016

See all articles by Stephen Gibbons

Stephen Gibbons

London School of Economics & Political Science (LSE) - Department of Geography and Environment

Teemu Lyytikäinen

Government of the Republic of Finland - VATT Institute for Economic Research; Spatial Economics Research Centre (SERC)

Henry G. Overman

London School of Economics (LSE) - Department of Geography and Environment; Centre for Economic Policy Research (CEPR)

Rosa Sanchis-Guarner

Queen Mary University of London - School of Economics and Finance

Date Written: April 2016

Abstract

This paper estimates the impact of new road infrastructure on employment and productivity using plant level longitudinal data for Britain. Exposure to transport improvements is measured through changes in accessibility, which is calculated at a detailed geographical scale from changes in minimum journey times along the road network. These changes are induced by the construction of new road link schemes. We deal with the potential endogeneity of scheme location by identifying the effects of changes in accessibility from variation across wards close to the scheme. We find substantial positive effects on employment and numbers of plants for small-scale geographical areas (electoral wards). In contrast, for firms already in the area we find negative effects on employment coupled with increases in output per worker and wages. A plausible interpretation is that new transport infrastructure attracts transport intensive firms to an area, but with some cost to employment in existing businesses.

Keywords: accessibility, employment, productivity, transport

JEL Classification: D24, O18, R12

Suggested Citation

Gibbons, Stephen and Lyytikäinen, Teemu and Overman, Henry G. and Sanchis-Guarner, Rosa, New Road Infrastructure: The Effects on Firms (April 2016). CEPR Discussion Paper No. DP11239, Available at SSRN: https://ssrn.com/abstract=2769855

Stephen Gibbons (Contact Author)

London School of Economics & Political Science (LSE) - Department of Geography and Environment ( email )

Houghton Street
London, WC2A 2AE
United Kingdom
[44] (0)20 7955 6245 (Phone)
[44] (0)20 7955 7773 (Fax)

HOME PAGE: http://www.lse.ac.uk/people/s.gibbons@lse.ac.uk/

Teemu Lyytikäinen

Government of the Republic of Finland - VATT Institute for Economic Research ( email )

Arkadiankatu 7
P.O Box 1279
Helsinki, FIN-00531
Finland

Spatial Economics Research Centre (SERC) ( email )

United Kingdom

Henry G. Overman

London School of Economics (LSE) - Department of Geography and Environment ( email )

Houghton Street
London, WC2A 2AE
United Kingdom
+44 20 7955 6581 (Phone)
+44 20 7955 7412 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Rosa Sanchis-Guarner

Queen Mary University of London - School of Economics and Finance ( email )

Mile End Rd
Mile End Road
London, London E1 4NS
United Kingdom

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