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Wages and accessibility: the impact of transport infrastructure

Wages and accessibility: the impact of transport infrastructure. Anna Matas Josep LLuis Raymond Josep LLuis Roig Universitat Autònoma de Barcelona ERSA Congress, Barcelona 2011. Contents. Introduction Productivity and market accessibility Data Estimated models Results Conclusions.

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Wages and accessibility: the impact of transport infrastructure

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  1. Wages and accessibility: the impact of transport infrastructure Anna Matas Josep LLuis Raymond Josep LLuis Roig Universitat Autònoma de Barcelona ERSA Congress, Barcelona 2011

  2. Contents • Introduction • Productivity and market accessibility • Data • Estimated models • Results • Conclusions

  3. Introduction • Objective: to assess the impact that investment in road infrastructure can have on firm productivity. • Moreover, we also look at the impact of agglomeration effects on productivity. • Productivity is approached by individual wages. • Workplace is allocated at NUTS III level. • Repeated cross-section data for 1995, 2002 and 2006. • Empirical evidence using micro-data: Graham (2007), Combes et al. (2008), Mion and Naticchioni (2009), Gibbons et al (2010),and for a review Melo et al (2009). • Empirical evidence for Spain (on firm location): Alañón and Arauzo (2008), Albarrán, Carrasco and Holl (2008), Arauzo (2005), Holl (2004, 2006), Matas and Roig (2004)

  4. 2. Productivity and market accessibility • Improved accessibility allows for larger economies of scale due to wider potential markets • Improved accessibility increases exposition to competition and generates incentives to higher efficiency. (Sorting of higher productivity firms)

  5. - Improved accessibility can affect economies of agglomeration in two ways: 1. Better accessibility can attract new and relocating firms to positively affected areas, increasing the size of agglomeration 2. Better accessibility increases the spatial scope of economies of agglomeration

  6. 3. Data • Source: Spanish Earnings Structure Survey (EES): 1995, 2002 and 2006. • Micro data on individual wages • Spatial unit: provinces (NUTS III) • Data on workers and firm characteristics • Sectors: manufacturing + services

  7. Summary statistics

  8. Summary statistics

  9. Market potential 2006

  10. Change (%) in travel time 1995-2006

  11. Change (%) in market potential: 1995-2006

  12. CHANGE IN TIME (%) VS CHANGE IN POTENTIAL (%)

  13. Estimated equation

  14. Estimated coefficients OLS Robustness: coefficients of interest are highly stable to the selection of control variables

  15. Possible endogeneity problems • Troublesome explanatory variables: market potential, employment density, specialization and human capital • Instruments: market potential in 1980, population density in 1860, specialization in 1980 and demographic structure in 1991 (share of 19-15 years minus share of 9-5 years)

  16. Estimated coefficients IV

  17. Test for instrument’s validity

  18. Hausman exogeneity test Ho: variables are exogenous All sectors: Robust score chi2(5) = 500.269 (p=0.0000) Robust regression F(5,310309) = 101.226 (p = 0.0000) Manufacturing: Robust score chi2(5) = 136.947 (p=0.0000) Robust regression F(5,164840) = 27.7033 (p = 0.0000) Services: Robust score chi2(5) = 287.792 (p = 0.0000) Robust regression F(5,145431) = 58.1808 (p = 0.0000)

  19. Results • Positive and significant effect of road accessibility on wages with a similar impact on manufacturing and services industries. • Non linear effect of employment density with a different pattern for manufacturing and services. • Evidence of positive human capital externalities • Positive specialization effect more significant for manufacturing than for services. • Distance to French border is significant for manufacturing but only marginally for services.

  20. Elasticity of wages (productivity)

  21. Effects of employment density on wages

  22. Elasticity wages-employment density

  23. Conclusions • Accessibility measured through market potential positively affects wages (Productivity) • Evidence of agglomeration economies measured by employment density • Evidence of human capital externalities: After controlling for individual educational level, the human capital of the province is positive and statistically significant

  24. Pending task Infrastructure investment reduces travel time, increases potential, increases productivity and this leads to a further increase in market potential Take these feedback effects into account must be the target of further research Include measures of accessibility for other transport modes

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