Liberalizing Passenger Rail: The Effect of Competition on Local Unemployment

54 Pages Posted: 2 Nov 2021 Last revised: 22 Apr 2022

See all articles by Ondrej Badura

Ondrej Badura

VSB - Technical University Ostrava, Faculty of Economics

Ales Melecky

VSB - Technical University Ostrava, Faculty of Economics

Martin Melecky

World Bank

Date Written: November 1, 2021

Abstract

Competitive passenger rail can help workers access new or better jobs. This paper studies the wider economic impacts on local unemployment of the liberalized passenger rail between Ostrava, the third-biggest city in the Czech Republic, and Prague, its capital. The local impacts are estimated at the LAU 1 level (administrative districts) using the difference-in-differences method within a regression model including district-level control variables. The districts on the railway line are the treated districts and the districts that do not neighbor the treated districts are the control districts. The liberalization of passenger rail on the Ostrava-Prague line motivated the entry of two new private providers. The resulting competition in ticket prices, the number of connections, and service quality had a strong beneficial effect on labor market connectivity. It significantly reduced unemployment in the districts along the line compared with the control districts. The effect weakens with the distance from the route and the level of urbanization of the treated district. The results are robust to a battery of tests.

Keywords: Competition, difference in differences, districts, liberalization, local labor market, passenger transport, railways, unemployment, urbanization, EU country, OECD country

JEL Classification: J6, L4, R1, R4

Suggested Citation

Badura, Ondrej and Melecky, Ales and Melecky, Martin, Liberalizing Passenger Rail: The Effect of Competition on Local Unemployment (November 1, 2021). Available at SSRN: https://ssrn.com/abstract=3954106 or http://dx.doi.org/10.2139/ssrn.3954106

Ondrej Badura

VSB - Technical University Ostrava, Faculty of Economics ( email )

Ostrava
Czech Republic

Ales Melecky

VSB - Technical University Ostrava, Faculty of Economics ( email )

Ostrava
Czech Republic

Martin Melecky (Contact Author)

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

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