The Economics of Traveling: A Study of High-Speed-Railway Expansion

Abstract

Human mobility across cities is a crucial factor for regional development, yet its effects and mechanism remain poorly understood due to limited data on travel flows and their mixed purposes. This paper addresses this gap by using high-frequency GPS data from mobile users in China to measure travel flows across cities and to disentangle business and leisure activities, which have different implications for regional structural change. Furthermore, I develop a multi-sector economic geography model with both trade in goods and travel in humans to examine the welfare effects of China’s recent expansion of the High-Speed-Railway system (HSR) since HSR only reduces people’s travel costs, not goods’ trade costs. The model suggests travel flows and their sensitivity to spatial functions are sufficient to evaluate welfare. I estimate the human mobility aspect of infrastructural improvement contributes to 0.3 percent of GDP. I also find significant inequality in the gains of HSR across cities and industries. These results have important implications for the ongoing
policy debate on infrastructure improvement.

Keywords: transportation, infrastructure, high speed railway, travel

JEL Classification: R2, R3, R41