The Effects of Roads on Trade and Migration: Evidence from a Planned Capital City

Melanie Morten and Jaqueline Oliveira

American Economic Journal: Applied Economics, 2024, vol. 16, issue 2, 389-421

Abstract: A large body of literature studies how infrastructure facilitates trade. We ask whether infrastructure also facilitates migration. Using a general equilibrium trade model and rich spatial data, we study the impact of a large, plausibly exogenous shock to highways in Brazil on both goods and labor markets. We find the highway system increased welfare by 2.8 percent, of which 76 percent was due to reduced trade costs and 24 percent to reduced migration costs. An implication of costly migration is spatial heterogeneity in benefits: the range of welfare improvement is 1 to 15 percent, as opposed to uniform gains with perfect mobility.

JEL-codes: H54 H76 O18 R23 R42 R53 (search for similar items in EconPapers)
Date: 2024
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Citations: View citations in EconPapers (6)

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DOI: 10.1257/app.20180487

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