Productivity Effects of an Exogenous Improvement in Transport Infrastructure: Accessibility and the Great Belt Bridge

Tinbergen Institute Discussion Paper 2019-065/VIII

56 Pages Posted: 23 Sep 2019

See all articles by Bruno De Borger

Bruno De Borger

University of Antwerp - Department of Economics

Ismir Mulalic

Technical University of Denmark

Jan Rouwendal

VU University Amsterdam - Department of Spatial Economics; Tinbergen Institute

Date Written: September 13, 2019

Abstract

Most studies of the effects of transport infrastructure on the performance of individual firms have focused on marginal expansions of the rail or highway network over time. In this paper, we study the short-run effects of a large discrete shock in the quality of transport infrastructure, viz. the opening of the Great Belt bridge connecting the Copenhagen area with a neighboring island and the mainland of Denmark. We analyse the effect of the opening of the bridge on the productivity of firms throughout the country using a two-step approach: we estimate firm- and year-specific productivity for a large panel of individual firms, using the approaches developed by Levinsohn and Petrin (2003) and De Loecker (2011). Then, controlling for firm-fixed effects, we relate productivity to a calculated measure of accessibility that captures the effect of the opening of the bridge. We find large productivity effects for firms located in the regions near the bridge, especially for relatively small firms in the construction and retail industry. Estimation results further suggest statistically significant but small positive wage effects throughout the country, even in regions far from the bridge. Finally, there is some evidence that the bridge has stimulated new activities in the Copenhagen region at the expense of firms disappearing on the neighboring island Funen.

Keywords: production functions, productivity, accessibility, agglomeration, transport infrastructure

JEL Classification: R12, H54, O18

Suggested Citation

De Borger, Bruno and Mulalic, Ismir and Rouwendal, Jan, Productivity Effects of an Exogenous Improvement in Transport Infrastructure: Accessibility and the Great Belt Bridge (September 13, 2019). Tinbergen Institute Discussion Paper 2019-065/VIII, Available at SSRN: https://ssrn.com/abstract=3453156 or http://dx.doi.org/10.2139/ssrn.3453156

Bruno De Borger (Contact Author)

University of Antwerp - Department of Economics ( email )

Prinsstraat 13
Antwerp, B-2000
Belgium
+32/3/220.40.31 (Phone)
+32/3/220.47.99 (Fax)

Ismir Mulalic

Technical University of Denmark ( email )

Anker Engelunds Vej 1
Building 101A
Lyngby, 2800
Denmark

Jan Rouwendal

VU University Amsterdam - Department of Spatial Economics ( email )

De Boelelaan 1105
1081HV Amsterdam
Netherlands

Tinbergen Institute ( email )

Burg. Oudlaan 50
Rotterdam, 3062 PA
Netherlands

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