Working Paper: NBER ID: w20235
Authors: Stephen J. Redding; Matthew A. Turner
Abstract: This paper surveys the theoretical and empirical literature on the relationship between the spatial distribution of economic activity and transportation costs. We develop a multi-region model of economic geography that we use to understand the general equilibrium implications of transportation infrastructure improvements within and between locations for wages, population, trade and industry composition. Guided by the predictions of this model, we review the empirical literature on the effects of transportation infrastructure improvements on economic development, paying particular attention to the use of exogenous sources of variation in the construction of transportation infrastructure. We examine evidence from different spatial scales, between and within cities. We outline a variety of areas for further research, including distinguishing reallocation from growth and dynamics.
Keywords: Transportation Costs; Economic Activity; Spatial Organization
JEL Codes: F15; R12; R40
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Transportation infrastructure (R42) | Population density (J11) |
| Transportation infrastructure (R42) | Economic activity (E29) |
| Improvements in transportation infrastructure (R42) | Increases in employment growth (O49) |
| Construction of radial highways (R42) | Decrease in central city populations (R23) |