Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/331667 
Year of Publication: 
2025
Series/Report no.: 
IZA Discussion Papers No. 18103
Publisher: 
Institute of Labor Economics (IZA), Bonn
Abstract: 
We study the impact of transport-induced agglomeration on workers' earnings, as well as the productivity and costs of establishments, in the capital region of Finland using comprehensive individual- and establishment-level registry data. To our knowledge, we are the first to jointly examine firm- and worker-level effects of agglomeration. We find that improved workplace-to-workplace accessibility increases employees' annual earnings, particularly among workers in smaller firms. However, we find no statistically significant effects on value added or labour costs per worker at the establishment level. We propose two potential explanations for this discrepancy: (1) differences in the composition of workers between the worker- and establishment-level analyses due to, for example, new hires, and (2) rising costs associated with increased agglomeration. Further analysis reveals that enhanced accessibility leads to higher establishment employment and increased operating expenses, such as rents. Taken together, these findings suggest that the benefits of agglomeration are primarily shared between workers and property owners.
Subjects: 
agglomeration
productivity
transport project
accessibility
JEL: 
R41
R42
R12
Document Type: 
Working Paper

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