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Simulating the impact of transport infrastructure investment on wages: a dynamic spatial panel model approach

Fingleton, Bernard and Szumilo, Nikodem (2019) Simulating the impact of transport infrastructure investment on wages: a dynamic spatial panel model approach. Regional Science and Urban Economics, 75. pp. 148-164. ISSN 0166-0462

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Identification Number: 10.1016/j.regsciurbeco.2018.12.004

Abstract

This paper estimates the impact of a multi-billion pound investment in Britain's rail transport infrastructure, in the form of high-speed rail links, on wage levels across each of 347 districts of England and Wales. The impacts are based on a dynamic spatial panel model adaptation of standard urban economics based on employment density and commuting patterns. This allows estimation of these global impacts operating via improved commuting times. We demonstrate that while estimates of a traditional market potential approach with fixed effects are to some extent qualitatively and quantitatively similar to our predictions, our predictions allow more heterogeneous effects and give more accurate forecasts. The study finds that on average wages increase by around 2% as employment centres gain improved access to more skilled workers and as spillover effects become spatially more extensive. While most areas see modest positive effects, some locations are negatively affected, in the extreme case by as much as 7%.

Item Type: Article
Additional Information: © 2019 Elsevier
Divisions: Geography & Environment
Subjects: H Social Sciences > HN Social history and conditions. Social problems. Social reform
JEL classification: C - Mathematical and Quantitative Methods > C3 - Econometric Methods: Multiple; Simultaneous Equation Models; Multiple Variables; Endogenous Regressors > C33 - Models with Panel Data
C - Mathematical and Quantitative Methods > C5 - Econometric Modeling > C53 - Forecasting and Other Model Applications
J - Labor and Demographic Economics > J3 - Wages, Compensation, and Labor Costs > J31 - Wage Level and Structure; Wage Differentials by Skill, Training, Occupation, etc.
R - Urban, Rural, and Regional Economics > R4 - Transportation Systems > R40 - General
R - Urban, Rural, and Regional Economics > R1 - General Regional Economics > R11 - Regional Economic Activity: Growth, Development, and Changes
R - Urban, Rural, and Regional Economics > R1 - General Regional Economics > R12 - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade
Date Deposited: 01 Feb 2019 11:57
Last Modified: 23 Jun 2019 23:07
URI: http://eprints.lse.ac.uk/id/eprint/100014

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