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High-speed Rail and the Spatial Distribution of Economic Activity: Evidence from Japan's Shinkansen

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  • Koster, Hans
  • Hayakawa, Kazunobu
  • Thisse, Jacques-François

Abstract

We investigate the effects of high-speed rail (HSR) on the location of economic activity. We set up a spatial quantitative general equilibrium model that incorporates spatial linkages between firms (including manufacturing and services), agglomeration economies, as well as commuting and migration. The model is estimated for Japan in order to investigate the impacts of the Shinkansen, i.e., the first HSR ever built. We show that traveling by train strengthens firms' linkages, but is less important for commuting interactions. The Shinkansen increases welfare by about 5%. We show that extensions of the Shinkansen network may have large effects (up to a 30% increase in employment) on connected municipalities, although the effects are smaller for places with higher fixed costs. Our counterfactuals show that, without the Shinkansen, Tokyo and Osaka would be 6.3% and 4.4% larger, respectively.

Suggested Citation

  • Koster, Hans & Hayakawa, Kazunobu & Thisse, Jacques-François, 2021. "High-speed Rail and the Spatial Distribution of Economic Activity: Evidence from Japan's Shinkansen," CEPR Discussion Papers 15771, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:15771
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    2. Lennox, James, 2023. "Spatial economic dynamics in transport project appraisal," Economic Modelling, Elsevier, vol. 127(C).
    3. Yongling Li & Junxian Yang & Weiqiang Zhang & Zhou Zhou & Jianhui Cong, 2022. "Does High-Speed Railway Promote High-Quality Development of Enterprises? Evidence from China’s Listed Companies," Sustainability, MDPI, vol. 14(18), pages 1-33, September.
    4. Hans R A Koster & Takatoshi Tabuchi & Jacques-François Thisse, 2022. "To be connected or not to be connected? The role of long-haul economies [Do rural roads create pathways out of poverty? Evidence from India]," Journal of Economic Geography, Oxford University Press, vol. 22(4), pages 711-753.
    5. YOO Sunbin & KUMAGAI Junya & KAWASAKI Kohei & HONG Sungwan & ZHANG Bingqi & SHIMAMURA Takuya & MANAGI Shunsuke, 2022. "Double-edged Trains: Economic outcomes and regional disparity of high-speed railways," Discussion papers 22060, Research Institute of Economy, Trade and Industry (RIETI).

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    More about this item

    Keywords

    High-speed rail; Employment; Population; Agglomeration; Commuting;
    All these keywords.

    JEL classification:

    • D04 - Microeconomics - - General - - - Microeconomic Policy: Formulation; Implementation; Evaluation
    • H43 - Public Economics - - Publicly Provided Goods - - - Project Evaluation; Social Discount Rate
    • R42 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Government and Private Investment Analysis; Road Maintenance; Transportation Planning

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