Road Capacity, Domestic Trade and Regional Outcomes

Kerem Cosar, Banu Demir, Devaki Ghose and Nathaniel Virgil C Young

No 9772, Policy Research Working Paper Series from The World Bank

Abstract: What is the impact on intranational trade and regional economic outcomes when the quality and lane capacity of an existing paved road network is expanded significantly This paper investigates 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, the paper estimates 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 inc reased the local employment-to-population ratio but had no effect on local population. The model is extended 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.

Keywords: International Trade and Trade Rules; Transport Services; Labor Markets; Roads & Highways; Inter-Urban Roads and Passenger Transport; Roads and Highways Performance (search for similar items in EconPapers)
Date: 2021-09-13
New Economics Papers: this item is included in nep-ara, nep-geo, nep-tre and nep-ure
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Citations: View citations in EconPapers (4)

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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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