Seminar Friday 24 January 2014

Bridges: Transport Infrastructure and Economic Geography on the Mississippi and Ohio 1860-2000

Abstract

How important is the relocation of economic activity in assessing the aggregate impact of transport infrastructure? This paper evaluates the dynamic response to changes in land transport routes over the Ohio and Mississippi rivers, leveraging bridge construction and the sharp local changes induced in feasible journeys and travel times. I argue that the timing of construction of major bridges, within a window of several decades, is exogenous to growth conditional on local, long-term trends. The population of a county that experiences a 50% reduction in distance to a bridge grows by an additional 3% over the following 30 years, relative to a median growth rate of 15% over the same time period. Using the value of agricultural land as a proxy for production, I show that the accumulation in population is precipitated by an immediate local rise in per capita production. After 30 years, production and population density remain elevated in areas with relatively good transport access, but differences in per capita production have disappeared. I use an instrumental variables approach which exploits discontinuities in the  volumetric flow rate in rivers at confluences with major tributaries to estimate the longer-run impact of transport infrastructure. I find suggestive evidence for larger positive long-run impacts of proximity to transport routes on population density, weakly positive impacts on production, and negative impacts on per capita production. While basic economic theory anticipates these results, ignoring the endogenous population response would lead to grossly misleading conclusions about the aggregate impact of transport infrastructure.

Contact: Battista Severgnini