Road Capacity, Domestic Trade and Regional Outcomes

A. Kerem Coşar, Banu Demir (), Devaki Ghose and Nathaniel Young

No 29228, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: What is the impact on intra-national trade and regional economic outcomes when the quality and lane-capacity of an existing paved road network is expanded significantly? We investigate this question for the case of Turkey, which undertook a large-scale public investment in roads during the 2000s. Using spatially disaggregated data on road upgrades and domestic transactions, we estimate a large positive impact of reduced travel times on trade as well as local manufacturing employment and wages. A quantitative exercise using a workhorse model of spatial equilibrium implies heterogeneous effects across locations, with aggregate real income gains reaching 2-3 percent in the long-run. Reductions in travel times increased local employment-to-population ratio but had no effect on local population. We extend the model by endogenizing the labor supply decision to capture this finding. The model-implied elasticity of employment rates to travel time reductions captures about one-third of the empirical elasticity.

JEL-codes: F14 R11 R41 (search for similar items in EconPapers)
Date: 2021-09
New Economics Papers: this item is included in nep-isf and nep-lma
Note: ITI
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Citations: View citations in EconPapers (4)

Published as A Kerem Coşar & Banu Demir & Devaki Ghose & Nathaniel Young, 2022. "Road capacity, domestic trade and regional outcomes," Journal of Economic Geography, vol 22(5), pages 901-929.

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Related works:
Working Paper: Road Capacity, Domestic Trade and Regional Outcomes (2021)
Working Paper: Road Capacity, Domestic Trade and Regional Outcomes (2021)
Working Paper: Road Capacity, Domestic Trade and Regional Outcomes (2021)
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