THE IMPACT OF HIGHWAYS ON REGIONAL EMPLOYMENT AND ESTABLISHMENTS’ LOCATION: EVIDENCE FROM JAPAN

Abstract

 We study the impact of highways on the geography of regional employment and establishments. To identify the causal effect and its spatial scope, we have relied on geographical random sampling, propensity score matching and difference-in-difference estimator. Using the data of highway interchanges which were put into service between 1996 and 2014 in Japan, we estimate the impact of the openings of highway interchanges on the density of employment and establishments in the surrounding area by distance bands and by industries. The results show that new highway interchanges increase regional total employment by 3.4% and that the effect appears within 4km. We also show the robustness of the proposed method by comparing with the alternative conventional method.