Decreased Commuting Time and Its Effects on Accessibility and Productivity
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Decreased Commuting Time and its Effects on Accessibility and Productivity Master’s Thesis within Economics Author: Konrad Svanberg Tutor: Johan Klaesson Johan P. Larsson Jönköping: 2014-12-08 Acknowledgement In order to complete this thesis I have received a great amount of support and encouragement, which has been much appreciated. I would also like to express my gratitude to my two supervisors for very supportive guidance and feedback throughout the writing process that have been very helpful. Finally, I would also like to express my gratefulness to friends and family for their never-ending support and encouragement during difficult times. Jönköping, Sweden, December 2014 Konrad Svanberg i Master’s Thesis within Economics Title: Decreased Commuting Time and its Effects on Accessibility and Productivity Author: Konrad Svanberg Tutors: Johan Klaesson Johan P. Larsson Date: December, 2014 Keywords: Regional Accessibility, Commuting Time, Potential of Opportunities, Productivity Abstract: This thesis analyzes how a decrease in the commuting time affects the region’s productivity and accessibility on the targeted area Jönköping, Vaggeryd and Värnamo. Numerous municipalities that surround the railway, within a one-hour time range have been included to determine whether an investment on the railway is efficient. The potential growth effects and productivity are measured in wages, and the accessibility is measured as population accessibility. The accessibility is calculated with an accessibility measure, also known The Potential of Opportunities. Additionally, the study includes four control variables. Out of these, four of the six variables proved to significantly influence the regions accessibility and productivity whereas multicollinearity is present in the remaining two. The study differentiates from other similar reports in such way that it investigates a brand new area, different municipalities and finally through the control variables that have not been explicitly used for this specific purpose. The investment is shown to have a substantial effect on the municipalities, especially the smaller ones close to the railway. Shorter time distances, better accessibility and increased productivity all contribute to economic growth and agglomeration. ii Table of Contents 1. Introduction .............................................................................................................. 1 2. Background .............................................................................................................. 3 2.1 Infrastructure ................................................................................................................. 3 2.2 Density and Enlargement of Regions ........................................................................... 5 2.3 Productivity .................................................................................................................... 7 3. Theoretical Framework ......................................................................................... 10 3.1 Knowledge Spillovers ................................................................................................... 10 3.2 Labor Market Pooling ................................................................................................. 11 3.3 Input Sharing ................................................................................................................ 12 3.4 Hypotheses .................................................................................................................... 13 4. Method .................................................................................................................... 14 4.1 The Model ..................................................................................................................... 14 4.2 Problems with the Model ............................................................................................. 16 4.3 Empirical design ........................................................................................................... 16 5. Empirical Study and Data ..................................................................................... 18 5.1 The current situation ................................................................................................... 19 5.1.1 Population ............................................................................................................... 20 5.1.2 Income .................................................................................................................... 22 5.1.3 Employment ............................................................................................................ 23 5.1.4 Commuters .............................................................................................................. 23 5.1.5 Education ................................................................................................................ 24 5.1.6 Industries ................................................................................................................. 25 6. Results and Analysis .............................................................................................. 26 6.1 Descriptive Statistics .................................................................................................... 26 6.2 Regression Model ......................................................................................................... 28 7. Effects of the Investments ..................................................................................... 31 Bibliography ............................................................................................................... 35 iii Figures Figure 1: Willingness to commute ................................................................................. 7 Figure 2: Cumulative Process ........................................................................................ 8 Figure 3: Top Population 1968-2013 ........................................................................... 21 Figure 4: Bottom Population 1968-2013 ..................................................................... 22 Figure 5: Shares of Employees in Each Sector ............................................................ 25 Figure 6: Growth Effects after the Investments ........................................................... 31 Tables Table 1: Time Sensitivities .......................................................................................... 15 Table 2: Definition of Variables .................................................................................. 16 Table 3: Capacity Utilization of the Railway .............................................................. 19 Table 4: Percentage above the Country's Median Income ........................................... 22 Table 5: Percentage below the Country's Median Income ........................................... 22 Table 6: Boarding and Disembarking Commuters as Percent of Total Number of Commuters ................................................................................................................... 24 Table 7: Descriptive Statistics ..................................................................................... 26 Table 8: Bivariate Correlation Matrix .......................................................................... 26 Table 9: Regression Model .......................................................................................... 28 Appendix Table 10: Population .................................................................................................... 41 Table 11: Income ......................................................................................................... 42 Table 12: Employment ................................................................................................. 43 Table 13: Commuting .................................................................................................. 44 Table 14: Education ..................................................................................................... 45 Table 15: Industries ...................................................................................................... 46 Table 16: Growth Effects ............................................................................................. 47 iv 1. Introduction For a city to grow and become denser, the simplicity of commuting between different cities and regions is very important. The simplicity of commuting between two localities exerts an influence on the attractiveness of the city, or municipality, as a region to both live and work in. An improvement of the infrastructure and the transport system has been observed to result in both macroeconomic effects, such as contributing to an increased GDP growth (Aschauer, 1989), but also advantages from a microeconomic viewpoint. Throughout the thesis, the focus will be not on the macroeconomic effects, but on the microeconomic effects and its impact on the economy in terms of productivity. In order to decide whether the investment effects with the purpose of reducing commuting time - in this case an expansion of the railway - are efficient, numerous papers and articles have been presented. To name a few: Aschauer (1990), Lakshmanan and Anderson (2002), Ciccone and Hall (1996), Andersson and Larsson (2014), Andersson (2008), Johansson, Klaesson and Olsson (2002; 2003), Glaeser (2010), Rosenthal and Strange