Wages and accessibility: the impact of transport infrastructure

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Wages and accessibility the impact of transport
infrastructure

• Anna Matas
• Josep LLuis Raymond
• Josep LLuis Roig
• Universitat Autònoma de Barcelona
• ERSA Congress, Barcelona 2011

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Contents

1. Introduction
2. Productivity and market accessibility
3. Data
4. Estimated models
5. Results
6. Conclusions

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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)

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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)

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• - 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

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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

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Summary statistics
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Summary statistics
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Market potential 2006
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Change () in travel time 1995-2006
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Change () in market potential 1995-2006
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CHANGE IN TIME () VS CHANGE IN POTENTIAL ()
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Estimated equation
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Estimated coefficients OLS
Robustness coefficients of interest are highly
stable to the selection of control variables
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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)

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Estimated coefficients IV
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Test for instruments validity
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Hausman exogeneity test

• Ho variables are exogenous
• All sectors
• Robust score chi2(5) 500.269 (p0.0000)
• Robust regression F(5,310309) 101.226 (p
  0.0000)
• Manufacturing
• Robust score chi2(5) 136.947 (p0.0000)
• 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)

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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.

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Elasticity of wages (productivity)
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Effects of employment density on wages
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Elasticity wages-employment density
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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

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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