Working Paper: NBER ID: w22073
Authors: Taylor Jaworski; Carl T. Kitchens
Abstract: How effective are policies aimed at integrating isolated regions? We answer this question in the context of a highway system in one of the poorest regions in the United States. With construction starting in 1965, the Appalachian Development Highway System ultimately consisted of over 2,500 high-grade road miles. We use a simple model of interregional trade to motivate our empirical analysis, which quantifies the relationship between market access and income. We then calibrate the model to evaluate the aggregate impact of the ADHS and compare this with alternative counterfactual proposals. We find that removing the ADHS would have reduced total income by $53.7 billion in the United States with $22 billion of the losses in Appalachian counties. Our findings highlight the potential aggregate benefits of transportation infrastructure policies, but also suggest that leakage outside of the targeted area may be substantial.
Keywords: Appalachian Development Highway System; regional development; market access; income; transportation infrastructure
JEL Codes: N12; O18; O2; R13
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Removing the ADHS (I19) | Significant income losses (J17) |
| ADHS (I12) | Increase in income (E25) |
| Market access (L17) | Income (D31) |
| ADHS (I12) | Benefits accrue to counties not included in ARC (R59) |
| Alternative highway proposals (R48) | Mitigate income loss from removing ADHS (G52) |