This paper estimates the impact of new road infrastructure on employment and labour productivity using firm 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 establishments. For existing establishments we find increases in output per worker, wages and use of intermediate inputs. A plausible interpretation is that new transport infrastructure attracts transport intensive establishments to an area, and also leads to some reorganization of production in existing businesses.

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

1 March 2019

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Journal of Urban Economics 1102019

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DOI: 10.1016/j.jue.2019.01.002

https://www.sciencedirect.com/science/article/pii/S0094119019300105

This Journal article is published under the centre's Urban programme.

This publication comes under the following theme: Urban inequality: The role and determinants of urban productivity, Urban inequality: The role of urban amenities, housing, infrastructure