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Abstract:

cover
SERC/Urban and Spatial Programme Discussion Paper
Airports, Market Access and Local Economic Performance: Evidence from China
Stephen Gibbons and Wenjie Wu
February 2017
Paper No' SERCDP0211:
Full Paper (pdf)

JEL Classification: H54; O21; P25; R41


Tags: airports; infrastructure; productivity; china

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.