Scandinavian Working Papers in Economics

Research Papers in Economics,
Stockholm University, Department of Economics

No 2012:7: Airports and the Production of Goods and Services

Nicholas Sheard ()
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Nicholas Sheard: Dept. of Economics, Stockholm University, Postal: Department of Economics, Stockholm University, S-106 91 Stockholm, Sweden

Abstract: This paper estimates the effects of airport infrastructure on local sectoral employment, using data from the United States. To address the potential endogeneity in the determination of airport locations and sizes, the 1944 National Airport Plan is used to instrument for the current distribution of airports. The Plan had a strong effect on subsequent airport construction but appears to have been unrelated to other factors for current sectoral employment. Airport size is found to have a positive effect on local employment in tradable services, with an elasticity of approximately 0.15, but no measurable effect on non-tradable services. There is a negative effect on manufacturing. The effects are relevant to the evaluation of airport construction or improvement projects that aim to attract firms by making travel to and from the local area more convenient.

Keywords: Air transport; services trade; infrastructure

JEL-codes: F14; H54; R41

30 pages, First version: July 5, 2012. Revised: January 17, 2013.

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wp12_07_revised.pdf PDF-file 

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