21/09/2015 Wages and accessibility: the impact of transport infrastructure Anna Matas Josep LLuis Raymond Josep LLuis Roig Universitat Autònoma de Barcelona ERSA Congress, Barcelona 2011

21/09/2015 Contents 1.Introduction 2.Productivity and market accessibility 3.Data 4.Estimated models 5.Results 6.Conclusions

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 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)

21/09/ 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)

21/09/ 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

21/09/ Data Source: Spanish Earnings Structure Survey (EES): 1995, 2002 and Micro data on individual wages Spatial unit: provinces (NUTS III) Data on workers and firm characteristics Sectors: manufacturing + services

21/09/2015 Summary statistics

21/09/2015 Summary statistics

21/09/2015 Market potential 2006

21/09/2015 Change (%) in travel time

21/09/2015 Change (%) in market potential:

21/09/2015 CHANGE IN TIME (%) VS CHANGE IN POTENTIAL (%)

21/09/2015 Estimated equation

21/09/2015 Estimated coefficients OLS Robustness: coefficients of interest are highly stable to the selection of control variables

21/09/2015 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 years minus share of 9-5 years)

21/09/2015 Estimated coefficients IV

21/09/2015 Test for instrument’s validity

21/09/2015 Hausman exogeneity test Ho: variables are exogenous All sectors: Robust score chi2(5) = (p=0.0000) Robust regression F(5,310309) = (p = ) Manufacturing: Robust score chi2(5) = (p=0.0000) Robust regression F(5,164840) = (p = ) Services: Robust score chi2(5) = (p = ) Robust regression F(5,145431) = (p= )

21/09/2015 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.

21/09/2015 Elasticity of wages (productivity)

21/09/2015 Effects of employment density on wages

21/09/2015 Elasticity wages-employment density

21/09/2015 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

21/09/2015 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