The Effects of Infrastructure on Regional Economic Performance

This study explores the relationship of highway infrastructure and regional economic growth using a labor market model of net migration. Typical net migration model is revised adding variables of demand and supply indicators of highway infrastructure and tested at the U.S. state- and metropolitan areas. This study found positive effects of highway infrastructure on state economic performance; both the highway services demand indicator and the highway supply indicator performed as expected. Elasticity of net in-migration with respect to the per capita lanemiles of supply measure was between 0.129 and 0.454 and the elasticity with respect to vehicle-miles-traveled per lanemile of congestion measure was between - 0.511 and -0.015. The effects of the highway indicators are however weak at the MSA-level analysis suggesting that highway infrastructure benefits spill over metro area boundaries and are experienced at a wider geographic scale.