The Effects of Roads on Trade and Migration: Evidence from a Planned Capital City
American Economic Journal: Applied Economics
vol. 16,
no. 2, April 2024
(pp. 389-421)
Abstract
A large body of literature studies how infrastructure facilitates trade. We ask whether infrastructure also facilitates migration. Using a general equilibrium trade model and rich spatial data, we study the impact of a large, plausibly exogenous shock to highways in Brazil on both goods and labor markets. We find the highway system increased welfare by 2.8 percent, of which 76 percent was due to reduced trade costs and 24 percent to reduced migration costs. An implication of costly migration is spatial heterogeneity in benefits: the range of welfare improvement is 1 to 15 percent, as opposed to uniform gains with perfect mobility.Citation
Morten, Melanie, and Jaqueline Oliveira. 2024. "The Effects of Roads on Trade and Migration: Evidence from a Planned Capital City." American Economic Journal: Applied Economics, 16 (2): 389-421. DOI: 10.1257/app.20180487Additional Materials
JEL Classification
- H54 National Government Expenditures and Related Policies: Infrastructures; Other Public Investment and Capital Stock
- H76 State and Local Government: Other Expenditure Categories
- O18 Economic Development: Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
- R23 Urban, Rural, Regional, Real Estate, and Transportation Economics: Regional Migration; Regional Labor Markets; Population; Neighborhood Characteristics
- R42 Transportation Economics: Government and Private Investment Analysis; Road Maintenance, Transportation Planning
- R53 Public Facility Location Analysis; Public Investment and Capital Stock
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