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The Effects of Roads on Trade and Migration: Evidence from a Planned Capital City

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  • Melanie Morten
  • Jaqueline Oliveira

Abstract

A large body of literature studies how infrastructure facilitates trade. We ask whether infrastructure also facilitates migration. Using a general equilibrium trade model and rich spatial data, we study the impact of a large, plausibly exogenous shock to highways in Brazil on both goods and labor markets. We find the highway system increased welfare by 2.8 percent, of which 76 percent was due to reduced trade costs and 24 percent to reduced migration costs. An implication of costly migration is spatial heterogeneity in benefits: the range of welfare improvement is 1 to 15 percent, as opposed to uniform gains with perfect mobility.

Suggested Citation

  • Melanie Morten & Jaqueline Oliveira, 2024. "The Effects of Roads on Trade and Migration: Evidence from a Planned Capital City," American Economic Journal: Applied Economics, American Economic Association, vol. 16(2), pages 389-421, April.
    • Handle: RePEc:aea:aejapp:v:16:y:2024:i:2:p:389-421
    DOI: 10.1257/app.20180487
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    Citations

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    Cited by:

    1. Chauvin, Juan Pablo, 2024. "Local Education Spending and Migration: Evidence from a Large Redistribution Program," IDB Publications (Working Papers) 13497, Inter-American Development Bank.
    2. David Escamilla-Guerrero, 2024. "All aboard! Railroad access and Mexico-US mass migration," Oxford Economic and Social History Working Papers _212, University of Oxford, Department of Economics.

    More about this item

    JEL classification:

    • H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures
    • H76 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Other Expenditure Categories
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population
    • R42 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Government and Private Investment Analysis; Road Maintenance; Transportation Planning
    • R53 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Public Facility Location Analysis; Public Investment and Capital Stock

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