Transport Infrastructure, City Productivity Growth and Sectoral Reallocation: Evidence from China
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Summary:
This paper examines the impact of highway expansion on aggregate productivity growth and sectoral reallocation between cities in China. To do so, I construct a unique dataset of bilateral transportation costs between Chinese cities, digitized highway network maps, and firm-level census. I first derive and estimate a market access measure that summarizes all direct and indirect impact of trade costs on city productivity. I then construct an instrumental variable to examine the causal impact of highways on economic outcomes and the underlying channels. The results suggest that highways promoted aggregate productivity growth by facilitating firm entry, exit and reallocation. I also find evidence that the national highway system led to a sectoral reallocation between cities in China.
Series:
Working Paper No. 2018/276
Subject:
Economic sectors Infrastructure Manufacturing National accounts Population and demographics Production Productivity Total factor productivity Transportation
English
Publication Date:
December 11, 2018
ISBN/ISSN:
9781484389584/1018-5941
Stock No:
WPIEA2018276
Pages:
63
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