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Airports, market access and local economic performance: Evidence from China

Stephen Gibbons and Wenjie Wu

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: In this paper we study the effect of airports on local economic performance that arises from better access to domestic markets, using China’s recent rapid air network expansion. We estimate the effects of the implied changes in access to population on measures of economic performance using a panel of counties built from administrative records and micro data on industrial firms. To mitigate endogeneity concerns we focus on a subsample of ‘incidentally’ affected counties, whose location midway between existing and new airports implies they not were explicitly targeted for development nor directly affected by airport operations. We also decompose market access into land-side and air-side components. Our key finding is that improved population access due to land-side distance reductions to airports increased industrial output and GDP, with an elasticity of around 0.25. An instrumental variables strategy exploiting conversion of historical military airports to civil use yields higher elasticities.

Keywords: airports; infrastructure; productivity; china (search for similar items in EconPapers)
JEL-codes: R14 J01 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cna and nep-geo
Date: 2017-02
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