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Air service and urban growth: Evidence from a quasi-natural policy experiment

Bruce Blonigen and Anca Cristea ()

Journal of Urban Economics, 2015, vol. 86, issue C, 128-146

Abstract: While significant work has been done to examine the determinants of regional development, there is little evidence on the role of air services. This paper exploits the large and swift changes to air traffic induced by the 1978 Airline Deregulation Act to identify the link between air traffic and local economic growth. Using data for 263 Metropolitan Statistical Areas (MSAs) over a two-decade time period, we estimate the effects of airline traffic on local population, income, and employment growth. Our most conservative estimates suggest that a 50-percent increase in an average city’s air traffic growth rate generates an additional stream of income over a 20-year period equal to 7.4 percent of real GDP, the equivalent of $523.3 million in 1978 dollars.

Keywords: Air transport; Passenger aviation; Urban growth; Regional development; Airline Deregulation Act (search for similar items in EconPapers)
JEL-codes: O18 R1 R4 (search for similar items in EconPapers)
Date: 2015
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Persistent link: https://EconPapers.repec.org/RePEc:eee:juecon:v:86:y:2015:i:c:p:128-146

DOI: 10.1016/j.jue.2015.02.001

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