ESRC End of Award Report

Transcription

1 ESRC End of Award Report For awards ending on or after 1 November 2009 This End of Award Report should be completed and submitted using the grant reference as the subject, to reportsofficer@esrc.ac.uk on or before the due date. The final instalment of the grant will not be paid until an End of Award Report is completed in full and accepted by ESRC. Grant holders whose End of Award Report is overdue or incomplete will not be eligible for further ESRC funding until the Report is accepted. We reserve the right to recover a sum of the expenditure incurred on the grant if the End of Award Report is overdue. (Please see Section 5 of the ESRC Research Funding Guide for details.) Please refer to the Guidance notes when completing this End of Award Report. Grant Reference ES/J007382/1 Grant Title Transport investments and spatial economic performance Grant Start Date 1 May 2011 Total Amount 268, Grant End Date 31 July 2012 Expended: Grant holding Institution London School of Economics Grant Holder Dr Steve Gibbons Grant Holder s Contact Details Address Houghton Street London WC2A 2AE Co-Investigators (as per project application): Henry Overman Daniel Graham Stephen Machin s.gibbons@lse.ac.uk Telephone Institution London School of Economics Imperial College University College London/LSE 1

2 1. Non-technical summary Please provide below a project summary written in non-technical language. The summary may be used by us to publicise your work and should explain the aims and findings of the project. [Max 250 words] The project provides empirical analyses of the effects of transport infrastructure improvement on economic performance, in Britain and international settings. The British strand of the work is the first to provide evidence on the overall impact of the recent road transport programme on economic performance. It links data on all new major roads constructed in Britain between 1998 and 2008 to firm and worker data, and examines to what extent roads affected employment, productivity work hours and wages. We find that new roads, which increase the accessibility of workplaces, boost local employment through entry of firms into an area, and raise wages and work hours. Looking further at road transport, we study the relationships between urban road infrastructure investment, traffic volumes, delays and economic output in US urban areas. The study shows that increases in road capacity induce increased traffic volume and congestion, but that these higher traffic volumes enable higher output. In other words, new roads do not relieve congestion, but do stimulate economic output. Accessibility by road in urban areas in the US is also found to be associated with greater productivity, potentially due to the agglomeration benefits arising from close connection between firms and between firms and workers. In contrast, a study of the impact of new High Speed rail lines in Spain after 2005 finds no evidence that expansion of the high speed rail network had any effect on output (value added per capita) of regions that received new rail lines, relative to regions in Portugal and elsewhere in Spain that did not. 2. Project overview a) Objectives Please state the aims and objectives of your project as outlined in your proposal to the us. [Max 200 words] The research aimed to understand the implications of transport investments for the spatial economy by identifying effects on workers and firms. It was proposed to look at the influence of the accessibility and cost of transport on the wages and other employment outcomes for workers (e.g. hours, full/time part time), and on the occupational structure of firms. It proposed to investigate the role that transport provision and costs play in firm productivity and in the distribution of agglomeration externalities that arise from clustering and localisation patterns. The research also intended to assess how estimates of the productivity effects arising from changes in the generalised costs of transport could be used for scheme appraisal. A second part of the project sought to estimate the effects of investment on road network performance, identifying which types of investment generate the biggest increases in performance. 2

3 b) Project Changes Please describe any changes made to the original aims and objectives, and confirm that these were agreed with us. Please also detail any changes to the grant holder s institutional affiliation, project staffing or funding. [Max 200 words] There were no substantive changes to the aims and objectives. The work carried out by LSE was completed as set out in the original proposal, with the exception of the suggestion of work on the effects of occupational choice, which is on-going. Imperial intended to carry out their research on road network performance using UK data, but the available data was found to be unsuitable for new work in this area. The research team turned instead to US data on urban road networks and network performance. They included additional work on the high speed rail transport in Spain. Work on rail had been part of the original proposal that formed part of the short-lived UK Transport Research Centre, although had been shelved in the subsequent reapplication for funding to ESRC. LSE also investigated and obtained rail timetable data, and detailed historical mapping data from Ordnance Survey for Britain, but this proved unsuitable, or beyond the scope of this project. c) Methodology Please describe the methodology that you employed in the project. Please also note any ethical issues that arose during the course of the work, the effects of this and any action taken. [Max 500 words] All the research is based on existing data sources that were extensively processed, linked and analysed using econometric methods. The range of methods is diverse in detail, but a unifying theme is the use of panel data methods to investigate the causal effects of changes in transport infrastructure on economic outcomes. A key step in the analyses was to generate variables measuring the intensity of exposure of geographical areas to transport improvements ( treatment ). The research on the effects of road infrastructure improvements on workers and firms uses an indicator of employment accessibility for this purpose. This captures the amount of employment that can be reached from a given location, per unit of travel time along the road network. This provides a standard method of measuring transport connections to areas of economic activity, either as a way to measure transport availability and/or agglomeration through the interconnectedness between economic agents (firms and workers). Our research is the first to generate national accessibility measures of this type for use in a panel data analysis of the effects of general changes in transport infrastructure on economic outcomes. For Britain, accessibility indices were calculated at electoral ward level from road network GIS data linked to and administrative employment data (at plant level) available from the ONS. Using these data, combined with information on major road transport projects, we constructed panel data map of employment accessibility at ward level for over 10,000 wards, by year from 1998 to For the firm analysis, this ward-level accessibility panel was linked by firm addresses (postcodes) and year to administrative data on UK businesses from ONS. For the labour market analysis, the accessibility measures were linked to worker home and work 3

4 postcodes in the Annual Survey of Hours and Earnings, and to home addresses in the Labour Force Survey. Using these worker and firm data panels, we used fixed-effects regression methods to estimate the effect of accessibility changes arising from road infrastructure improvements on firm and worker outcomes. The research recognised that decisions about where to build or improve roads are potentially driven by economic conditions, leading to biases in the estimated effects, and so restricted attention to changes in accessibility within narrow (10-30km) distance buffers around the road improvement schemes. Work on the effects of US road transport network on productivity uses similar methods, but in a more aggregated analysis of 51 US metropolitan areas over 4 years between 1990 and Research on road network performance in US metropolitan areas involved constructing a long panel of 100 US urbanised areas, with annual data on vehicle lane miles, vehicle miles of travel, hours of delay per traveller from 1982 to Economic data on output (gross domestic product) was linked to this network data. The causal links between vehicle lanes miles, miles of travel, congestion and panel were then analysed using dynamic panel data methods, employing time-series statistical techniques to ascertain where changes in variables caused subsequent changes in other variables. The work on high speed rail in Spain used a difference-in-difference methodology in which changes in economic value-added per capita in treatment regions in the Madrid-Barcelona corridor receiving new high speeds rail connections between 2006 and 2009 were compared to changes in control regions which did not receive these new rail connections. Control groups of regions in Portugal and north west Spain were carefully selected to match to the treatment regions such that the time trends in value added per capita in the pre-2005 period in the controls were similar to those in treatment group. d) Project Findings Please summarise the findings of the project, referring where appropriate to outputs recorded on the ESRC website. Any future research plans should also be identified. [Max 500 words] The research provides estimates of the impact of transport infrastructure on the economic performance of firms, workers, local areas and regions. Gibbons, Lyytikainen, Sanchis-Guarner and Overman estimate the impact of road-based employment accessibility on the employment, productivity and output of firms. The theoretical links between transport improvements and firm production are complex, with direct effects on firms costs of haulage and business travel, and indirect effects working through input costs, agglomeration and competitive forces. We do not model these channels but look at the overall effects on employment, number of plants, productivity and output. The analysis is carried out at the level of individual plants, and at a local geographically aggregated scale (electoral ward), allowing us to distinguish between changes occurring within existing plants and local changes occurring due to the entry of plants. The key finding is of sizeable impacts from new road infrastructure on the numbers of local plants and the total amount of local employment, with a 10% increase in accessibility leading to a 3% increase in employment. These effects occur in industrial sectors other than manufacturing and construction. We find no evidence of changes 4

5 in employment within existing firms. In contrast, any productivity effects are for existing plants and only in small-medium size plants with 6-50 employees. Sanchis-Guarner carries out a similar analysis, but for workers, investigating impacts of accessibility changes on wages and hours of work. This study finds that increased workplace accessibility leads to higher wages and hours of work. Increased accessibility of home location has no impact on wages or hours of work, nor on the probability of being employed, but does reduce commuting times. The analysis suggests that the effects at the workplace are from higher productivity for existing workers, rather than the sorting of higher productivity workers to more accessible places. These results are consistent with a story whereby greater accessibility raises workplace productivity through closer connections with other firms and workers, and consequent agglomeration effects. Related evidence is found from looking at US metropolitan areas (Melo, Graham, Levinson and Aarabi) who find evidence of an association between employment accessibility by road and average wages (a proxy for productivity) in a panel of urban areas. These findings are comparable to previous evidence of a link between agglomeration and productivity, but the research innovates on earlier work by using a travel-time based measure of employment accessibility rather than simple measures of density or city size. The effects of employment accessibility on wages are found to be concentrated within 20 minutes drive time. A common objection to increased road investment is that new infrastructure induces greater volumes of traffic and does nothing to alleviate congestion. Melo, Graham, and Canavan investigate this claim using panel data on US metropolitan areas spanning nearly three decades. Statistical concepts of causality (Granger causality) based on the premise that causes must precede effects are used to determine the causal chains. The results show that, increased road capacity induces greater volumes of traffic, with no improvement in network performance (reduced delays), even though congestion is evidently a factor influencing the decision to build more roads. More infrastructure and the consequent increase in traffic volumes, does, however, lead to higher economic output per capita in metropolitan areas. In contrast to these results on roads, our work on rail infrastructure in Spain (Graham, Brage- Ardao, and Melo) finds no evidence that the expansion of the high speed rail network has had any impact on the economic output (value-added per capita) of the regions receiving the high speed rail corridor, relative to comparator regions. The proposed regional economic benefits on which the case for high speed rail was based have not, so far, materialised. e) Contributions to wider ESRC initiatives (eg Research Programmes or Networks) If your project was part of a wider ESRC initiative, please describe your contributions to the initiative s objectives and activities and note any effect on your project resulting from participation. [Max. 200 words] Not applicable. 5

6 3. Early and anticipated impacts a) Summary of Impacts to date Please summarise any impacts of the project to date, referring where appropriate to associated outputs recorded on the Research Outcomes System (ROS). This should include both scientific impacts (relevant to the academic community) and economic and societal impacts (relevant to broader society). The impact can be relevant to any organisation, community or individual. [Max. 400 words] The papers that form the key outputs of this project have been disseminated widely in the academic community, and to policy makers both in Britain and internationally. A list of presentations and seminars is recorded on the ROS system. Overman has used the findings in presentations to policy makers and leading political figures, including a seminar for the Heseltine Growth Review (chaired by Heseltine), a City Deals seminar and labour market conference at BIS. Gibbons also gave an invited seminar to the French Ministère de l Écologie, du Développement Durable et de l Energie on our work on the effects of UK road transport on firms, and the work was also presented at the Netherlands Bureau of Economic Policy Analysis. Several strands of the research have been presented at the Transportation Research Board in the US. Research for many of the outputs from the project has only recently been completed and published online, so evidence of citation of the work by policy makers or academics is not available at this stage. Senior analysts in BIS/WAG have received copies of some of the findings for review via the process of publication in the SERC DP series. b) Anticipated/Potential Future Impacts Please outline any anticipated or potential impacts (scientific or economic and societal) that you believe your project might have in future. [Max. 200 words] Policy/economic impacts All the results from this project have implications for transport policy, by providing guidance on the economic benefits of transport infrastructure to local economies. In particular the reports on the effects of road transport improvements in Britain and high speed rail in Spain have clear messages on the economics benefits (or not) of transport infrastructure policy. The other work provides more nuanced lessons on the potential role of transport in improving regional economic performance. The work will be generally relevant to organisations involved in the evaluation and implementation of transport policy including Department of Local Authorities, Network Rail, Highways Agency, Transport Scotland, Welsh Assembly Government and private sector transport planning consultants. We expect BIS/WAG to be interested in the findings in relation to transport as a driver of spatial economic performance. We aim to produce a policy paper summarising the work in non-technical style and the investigators will use the press and public relations support at LSE to publicise findings that are of general public interest. Academic/scientific impacts The principle academic impact throughout the work is in demonstrating ex-post evaluation of transport infrastructure policy, using modern policy evaluation methods aimed at estimating causal impacts, on both aggregated and micro (individual and firm level) data. 6

7 You will be asked to complete an ESRC Impact Report 12 months after the end date of your award. The Impact Report will ask for details of any impacts that have arisen since the completion of the End of Award Report. 4. Declarations Please ensure that sections A, B and C below are completed and signed by the appropriate individuals. The End of Award Report will not be accepted unless all sections are signed. Please note hard copies are not required; electronic signatures are accepted and should be used. A: To be completed by Grant Holder Please read the following statements. Tick one statement under ii) and iii), then sign with an electronic signature at the end of the section (this should be an image of your actual signature). i) The Project This Report is an accurate overview of the project, its findings and impacts. All coinvestigators named in the proposal to ESRC or appointed subsequently have seen and approved the Report. ii) Submissions to the Research Outcomes System (ROS) Output and impact information has been submitted to the Research Outcomes System. Details of any future outputs and impacts will be submitted as soon as they become available. or This grant has not yet produced any outputs or impacts. Details of any future outputs and impacts will be submitted to the Research Outcomes System as soon as they become available. iii) Submission of Datasets Datasets arising from this grant have been offered for deposit with the Economic and Social Data Service. or Datasets that were anticipated in the grant proposal have not been produced and the Economic and Social Data Service has been notified. or No datasets were proposed or produced from this grant. 7