The Impacts of Transportation Investment on Economic Growth in the Twin Cities


Jason Cao, Michael Iacono, David Levinson, Mengying Cui

June 2016

Report no. CTS 16-11

The transportation system plays a critical role in fostering economic growth. Although previous studies have shed light on the impacts of transportation investments, their results are not readily adapted to predicting economic impacts of individual transportation projects. This study aimed to (1) investigate the impacts of transportation investments on economic growth (wages and employment) in the Twin Cities and (2) develop a method that practitioners can apply to predict economic growth resulting from investments in individual projects (as well as disinvestments). The capacity of such predictions is critical for the economy of the Twin Cities because transportation infrastructure lasts for decades once built. The method is expected to be used by practitioners of planning, programming, and finance at MnDOT and DEED, as well as at the Metropolitan Council. This study contributes to the base of knowledge by offering new empirical evidence on intra-urban patterns of agglomeration based on small-scale geographic data on job density from the Twin Cities. Our findings indicate that in general urbanization effects tend to dominate localization effects across a range of industries.

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