Agglomeration and Productivity: The Effect of Job-to-job Accessibility on Workers and Establishments

Taina Haapamäki, Oskari Harjunen, Antti Kauhanen, Veeti Kuivalainen, Krista Riukula, Nelli Valmari and Touko Väänänen

No 144, ETLA Reports from The Research Institute of the Finnish Economy

Abstract: Abstract In economics, the regional densification of economic activity is referred to as agglomeration. The effects of agglomeration are often referred to when discussing the wider economic benefits of transportation infrastructure projects. The magnitude of these effects has not been extensively studied in Finland. In this report, we examine the impact of agglomeration on productivity in the Helsinki region, utilizing extensive registry data. We find that improved job to job accessibility increases employees’ wages. However, our findings concerning the value-added at establishment level are less conclusive and statistically insignificant. Our results suggest that increased accessibility leads to increases in other operating expenses such as rents, potentially explaining the lack of statistically significant effect on value-added. Our results suggest that agglomeration benefits are predominantly intraregional, with interregional accessibility having little impact on these benefits. Thus, the ratio between the agglomeration benefits and the direct benefits of transportation infrastructure projects varies depending on the project. Including these benefits directly to cost-benefit analyses risks double counting some benefits. Taxes and similar payments on increased wages due to accessibility increases could be included as a separate item in the cost-benefit analysis.

Keywords: Agglomeration; Productivity; Transport project; Cost-benefit analysis; Accessibility; Wider economic impacts (search for similar items in EconPapers)
JEL-codes: R12 R41 R42 (search for similar items in EconPapers)
Pages: 42 pages
Date: 2024-01-23
New Economics Papers: this item is included in nep-eff, nep-eur, nep-tre and nep-ure
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.etla.fi/wp-content/uploads/ETLA-Raportit-Reports-144.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:rif:report:144

Ordering information: This working paper can be ordered from
https://www.etla.fi/ ... n-ja-tyontekijoihin/

Access Statistics for this paper

More papers in ETLA Reports from The Research Institute of the Finnish Economy Contact information at EDIRC.
Bibliographic data for series maintained by Kaija Hyvönen-Rajecki ().