Working Paper: CEPR ID: DP15905
Authors: Hans Koster; Takatoshi Tabuchi; Jacques-François Thisse
Abstract: We investigate what regions are the winners and losers from large transportation infrastructure improvements. We argue that long-haul economies - implying that the marginal transportation cost decreases with distance - play a pivotal role in understanding the location choices of firms. Using data from Japan and the Netherlands, we first establish that long-haul economies are an important feature of modern transportation networks. Then, we develop a simple model to show that improvements in transportation infrastructure have non-trivial impacts on the location choices of firms. While these investments are often beneficial to large regions, they may be detrimental to small intermediate regions, implying job losses. Using data on Japan's Shinkansen, we confirm that 'in-between' municipalities that are connected to the HSR witness a sizable decrease in employment.
Keywords: accessibility; transport infrastructure; long-haul economies; regional development
JEL Codes: H40; O18; R30; R42
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Home market effect (R31) | Increased attractiveness of larger metropolitan areas for firms (R12) |
| Improvements in transportation infrastructure (R42) | Decrease in employment shares in intermediate municipalities (J69) |
| Being connected to the Shinkansen (L92) | Decrease in employment shares in intermediate municipalities (J69) |
| Improvements in transportation infrastructure (R42) | Job losses in smaller intermediate regions (R11) |
| Improvements in transportation infrastructure (R42) | Hollowing out of intermediate areas (R11) |