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Do toll-free highways foster firm formation and employment growth? Results from a quasi-natural experiment

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  • Audretsch, David B.
  • Dohse, Dirk
  • dos Santos, João Pereira

Abstract

The paper studies the impact of a switch from free to charged highway provision on firm numbers and private sector employment in a cross-section of Portuguese municipalities. It exploits the fact that highway tolls in Portugal were unexpectedly raised in reaction to the financial crisis to establish causality. Results from a difference-in-differences analysis indicate a significantly negative effect of highway tolls on number of firms and employment in treated municipalities vis-à-vis the control group. We also find negative effects of tolls in municipalities not directly traversed by the treated highways, with larger firms and manufacturing firms being most strongly affected.

Suggested Citation

  • Audretsch, David B. & Dohse, Dirk & dos Santos, João Pereira, 2017. "Do toll-free highways foster firm formation and employment growth? Results from a quasi-natural experiment," Kiel Working Papers 2080, Kiel Institute for the World Economy (IfW Kiel).
    • Handle: RePEc:zbw:ifwkwp:2080
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    References listed on IDEAS

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    Cited by:

    1. Stephan Fretz & Raphaël Parchet & Frédéric Robert-Nicoud, 2022. "Highways, Market Access and Spatial Sorting," The Economic Journal, Royal Economic Society, vol. 132(643), pages 1011-1036.
    2. Busso, Matías & Fentanes, Oscar, 2024. "Building Up Local Productivity: Infrastructure and Firm Dynamics in Mexico," IDB Publications (Working Papers) 13759, Inter-American Development Bank.
    3. Miguel Ferreira & João Pereira dos Santos & Ana Venâncio, 2019. "Collateral Value and Entrepreneurship: Evidence from a Property Tax Reform," GEE Papers 0137, Gabinete de Estratégia e Estudos, Ministério da Economia, revised Dec 2019.
    4. Okamoto, Chigusa & Sato, Yasuhiro, 2021. "Impacts of high-speed rail construction on land prices in urban agglomerations: Evidence from Kyushu in Japan," Journal of Asian Economics, Elsevier, vol. 76(C).

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    More about this item

    Keywords

    infrastructure provision; regional economic development; quasi-natural experiment;
    All these keywords.

    JEL classification:

    • R48 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Government Pricing and Policy
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

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