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

Michael Iacono and David Levinson

No 101, Working Papers from University of Minnesota: Nexus Research Group

Abstract: 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.

Keywords: network expansion; economic evaluation; regional growth; rural development; economic development (search for similar items in EconPapers)
JEL-codes: O18 R42 (search for similar items in EconPapers)
Date: 2012
New Economics Papers: this item is included in nep-ppm, nep-tre and nep-ure
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http://hdl.handle.net/11299/179816 First version, 2012 (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:nex:wpaper:ruralexpansion

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