Abstract
One of the possible causes of poorer labour market outcomes for workers in peripheral regions is the small size of cities in these regions. Given this possibility, and the difficulty of affecting city size directly, a frequent policy response has been to invest in transport in order to increase access to markets. In this chapter we investigate how local labour markets respond to these potential transport improvements. We use data on individual workers in the UK to assess how area wages respond to better market access and examine whether this variation is due to a changing composition of the labour market or to higher wages for existing workers. Our results indicate that the increase in wages associated with reductions in transport times stems from changes in the composition of the workforce and that wage increases for local workers with unchanged characteristics are minimal.
JEL codes: R42; R23
This chapter is based on work for the Northern Way on Strengthening Economic Linkages Between Leeds and Manchester: Feasibility and Implications (full report: http://www.thenorthernway.co.uk/page.asp?id=817). We are grateful to the Northern Way for funding and to a steering group for advice. We thank Lizze Diss at the Department for Transport and Dan Graham at Imperial College London for their help with the ward to ward GTC for driving. We thank Peter Wiener at Steer Davies Gleeve and John Jarvis at Yorkshire Forward for advice on constructing the train counterfactuals. This work contains statistical data from ONS which is Crown copyright and reproduced with the permission of the controller of HMSO and Queen’s Printer for Scotland. The use of the ONS statistical data in this work does not imply the endorsement of the ONS in relation to the interpretation or analysis of the statistical data. This work uses research datasets which may not exactly reproduce National Statistics aggregates. Copyright of the statistical results may not be assigned, and publishers of this data must have or obtain a licence from HMSO. The ONS data in these results are covered by the terms of the standard HMSO “click-use” licence.
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Notes
- 1.
See, for example, the Manchester Independent Economic Review (2009) which considers this issue.
- 2.
Previously the New Earnings Survey.
- 3.
Northern Way (2009) provides more details.
- 4.
The 99 % coverage was last verified in 2004/05, although there is no reason to think that this is not still the case.
- 5.
While ASHE contains information on both home and work postcode, NES only provides the latter so we need to base our measure of access to economic mass on work rather than home location.
- 6.
They stem from Base Year (2004) Rail’Level of Service’ skims based on UK Midman rail data.
- 7.
- 8.
We only report coefficients on the accessibility measures. The full results can be found in an appendix to Northern Way (2009).
- 9.
Results in Northern Way (2009) show that excluding London does not make that much difference to the Train Accessibility coefficients that are the main focus of our counterfactual analysis below.
- 10.
We also allow for the second round (or knock on) effects on journeys between LAs not directly affected (e.g. Liverpool to Hull) that may see improved journey times as a result of the improved network. Northern Way (2009) provides more details on the construction of counterfactuals.
- 11.
It is also interesting to note that the gains, whether including or excluding compositional effects, vary widely across locations with the (already relatively successful) city centres of Manchester, Wakefield and Leeds gaining most from the reduction in train travel times. This suggests that any growth effect for the region as a whole may come at the expense of widening inequalities within the region. Ferraz, Heddad and Terra (this volume) consider a similar equity-growth trade-off in the very different context of the impact of trade liberalisation in Brazil.
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D’Costa, S., Gibbons, S., Overman, H., Pelkonen, P. (2013). Agglomeration and Labour Markets: The Impact of Transport Investments on Labour Market Outcomes. In: Crescenzi, R., Percoco, M. (eds) Geography, Institutions and Regional Economic Performance. Advances in Spatial Science. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-33395-8_13
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