Transportation Investment and Job Creation in Minnesota Counties

Principal Investigator:

Zhirong Zhao, Associate Professor, Humphrey School of Public Affairs

Project Summary:

Numerous studies have been conducted about the impact of transportation investment on economic development. These studies typically use a conventional production function model of economic development augmented by a public capital input, such as highways, rail, or other transportation investments. The findings, in general, confirm a positive elasticity between transportation investment and economic development, but the range of the effects varies widely among studies. In a recent research project, Zhao (2015) quantifies long-term transportation capital stocks in Minnesota counties and finds that these stocks have positive returns on property values. On average, one additional dollar of local road investment would increase assessed values by $1.25 for the county. For trunk highways, one additional dollar of investment within a county would generate about $3 in assessed values in a nearby region. In this proposed project, I will extend Zhao (2015)'s methodology to study the link between transportation investment and job creation. I am compiling a nice dataset about county business patterns in Minnesota. The data include (1) number of county business establishments, (2) jobs in Minnesota counties by sectors, and (3) the amount of annual payroll. Combining data about transportation investment, business patterns, and socioeconomic conditions in Minnesota counties during 1995-2010, I will use spatial econometric models to answer four sets of questions: -- What is the impact of transportation investment on business establishments by size and sector? -- How does transportation investment affect the number of jobs and the amount of annual payrolls? -- Which mode of transportation, trunk highways or local roads, is more effective in job creation? -- How does the link between transportation investment and job creation differ in metropolitan or rural counties? Findings of the research will have significant policy implications. Understanding the impact of transportation on job creation -- by region and by business sector -- can help state and local governments make informed decisions about transportation investment.


Project Details: