Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/245491 
Year of Publication: 
2021
Series/Report no.: 
CESifo Working Paper No. 9310
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
What is the impact on intra-national trade and regional economic outcomes when the quality and lane-capacity of an existing paved road network is expanded significantly? We investigate this question for the case of Turkey, which undertook a large-scale public investment in roads during the 2000s. Using spatially disaggregated data on road upgrades and domestic transactions, we estimate a large positive impact of reduced travel times on trade as well as local manufacturing employment and wages. A quantitative exercise using a workhorse model of spatial equilibrium implies heterogeneous effects across locations, with aggregate real income gains reaching 2-3 percent in the long-run. Reductions in travel times increased local employment-to-population ratio but had no effect on local population. We extend the model by endogenizing the labor supply decision to capture this finding. The model-implied elasticity of employment rates to travel time reductions captures about one-third of the empirical elasticity.
Subjects: 
trade
market access
transportation infrastructure
JEL: 
F14
R11
R41
Document Type: 
Working Paper
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