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SERC/Urban and Spatial Programme Discussion Paper

New Road Infrastructure: The Effects on Firms


This paper estimates the impact of new road infrastructure on employment and labour productivity using plant level longitudinal data for Britain. Exposure to transport improvements is measured through changes in accessibility, calculated at a detailed geographical scale from changes in minimum journey times along the road network. These changes are induced by the construction of new road link schemes. We deal with the potential endogeneity of scheme location by identifying the effects of changes in accessibility from variation across small-scale geographical areas close to the scheme. We find substantial positive effects on area level employment and number of plants. In contrast, for existing firms we find negative effects on employment coupled with increases in output per worker and wages. A plausible interpretation is that new transport infrastructure attracts transport intensive firms to an area, but with some cost to employment in existing businesses.


Stephen Gibbons, Teemu Lyytikäinen, Henry Overman and Rosa Sanchis-Guarner

19 May 2017     Paper Number SERCDP0214

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This SERC/Urban and Spatial Programme Discussion Paper is published under the centre's Urban programme.