[go: up one dir, main page]
IDEAS home Printed from https://ideas.repec.org/p/cii/cepidt/2017-02.html
   My bibliography  Save this paper

Domestic transport costs, Canada, and the Panama Canal

Author

Listed:
  • Camilo Umana Dajud
Abstract
By reducing transport costs infrastructure can impact wages, the distribution of population and welfare among other important variables. In this paper I exploit a natural experiment provided by the opening of the Panama Canal and intercoastal cargo routes connecting the west and east coasts of Canada through the canal to examine the causal impact of a reduction of domestic trade costs. The particular characteristics of this setting allow me to estimate the causal impact without recurring to instrumental variable strategies. The estimates are also not confounded with the Keynesian effect of building new infrastructure since no infrastructure was actually setup in Canada. Using least cost path routes along the Canadian transport grid I determine treated municipalities. The paper documents the positive impact of the reduction of transport costs on population and the value of real property but a negative impact on nominal wages. I then use a simplified version of an economic geography model with perfect mobility of workers to compute domestic trade shares between Canadian municipalities and productivities at the municipal level. I use these empirical results and the model, to quantify general equilibrium changes in wages, population and trade shares triggered by the reduction in domestic transport costs. Finally, I show that the opening of intercoastal shipping routes had a large positive welfare effect across Canadian municipalities.

Suggested Citation

  • Camilo Umana Dajud, 2017. "Domestic transport costs, Canada, and the Panama Canal," Working Papers 2017-02, CEPII research center.
    • Handle: RePEc:cii:cepidt:2017-02
    as

    Download full text from publisher

    File URL: http://www.cepii.fr/PDF_PUB/wp/2017/wp2017-02.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Andrew B. Bernard & Jonathan Eaton & J. Bradford Jensen & Samuel Kortum, 2003. "Plants and Productivity in International Trade," American Economic Review, American Economic Association, vol. 93(4), pages 1268-1290, September.
    2. Redding, Stephen J. & Turner, Matthew A., 2015. "Transportation Costs and the Spatial Organization of Economic Activity," Handbook of Regional and Urban Economics, in: Gilles Duranton & J. V. Henderson & William C. Strange (ed.), Handbook of Regional and Urban Economics, edition 1, volume 5, chapter 0, pages 1339-1398, Elsevier.
    3. Head, Keith & Mayer, Thierry, 2014. "Gravity Equations: Workhorse,Toolkit, and Cookbook," Handbook of International Economics, in: Gopinath, G. & Helpman, . & Rogoff, K. (ed.), Handbook of International Economics, edition 1, volume 4, chapter 0, pages 131-195, Elsevier.
    4. Dave Donaldson & Richard Hornbeck, 2016. "Railroads and American Economic Growth: A "Market Access" Approach," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 131(2), pages 799-858.
    5. Guy Michaels, 2008. "The Effect of Trade on the Demand for Skill: Evidence from the Interstate Highway System," The Review of Economics and Statistics, MIT Press, vol. 90(4), pages 683-701, November.
    6. Redding, Stephen J., 2016. "Goods trade, factor mobility and welfare," Journal of International Economics, Elsevier, vol. 101(C), pages 148-167.
    7. Jonathan Eaton & Robert Dekle & Samuel Kortum, 2007. "Unbalanced Trade," American Economic Review, American Economic Association, vol. 97(2), pages 351-355, May.
    8. Costas Arkolakis & Arnaud Costinot & Andres Rodriguez-Clare, 2012. "New Trade Models, Same Old Gains?," American Economic Review, American Economic Association, vol. 102(1), pages 94-130, February.
    9. Benjamin Faber, 2014. "Trade Integration, Market Size, and Industrialization: Evidence from China's National Trunk Highway System," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 81(3), pages 1046-1070.
    10. repec:hal:wpspec:info:hdl:2441/dambferfb7dfprc9m01g1j1k2 is not listed on IDEAS
    11. Banerjee, Abhijit & Duflo, Esther & Qian, Nancy, 2020. "On the road: Access to transportation infrastructure and economic growth in China," Journal of Development Economics, Elsevier, vol. 145(C).
    12. Anne-Célia Disdier & Keith Head, 2008. "The Puzzling Persistence of the Distance Effect on Bilateral Trade," The Review of Economics and Statistics, MIT Press, vol. 90(1), pages 37-48, February.
    13. Morris A. Davis & Francois Ortalo-Magne, 2011. "Household Expenditures, Wages, Rents," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 14(2), pages 248-261, April.
    14. Donaldson, Dave, 2010. "Railroads of the Raj: estimating the impact of transportation infrastructure," LSE Research Online Documents on Economics 38368, London School of Economics and Political Science, LSE Library.
    15. Dave Donaldson, 2010. "Railroads of the Raj: Estimating the Impact of Transportation Infrastructure," NBER Working Papers 16487, National Bureau of Economic Research, Inc.
    16. repec:hal:spmain:info:hdl:2441/dambferfb7dfprc9m01g1j1k2 is not listed on IDEAS
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Redding, Stephen J., 2016. "Goods trade, factor mobility and welfare," Journal of International Economics, Elsevier, vol. 101(C), pages 148-167.
    2. repec:esx:essedp:729 is not listed on IDEAS
    3. Breinlich, Holger & Ottaviano, Gianmarco I.P. & Temple, Jonathan R.W., 2014. "Regional Growth and Regional Decline," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 2, chapter 4, pages 683-779, Elsevier.
    4. Pablo D. Fajgelbaum & Edouard Schaal, 2020. "Optimal Transport Networks in Spatial Equilibrium," Econometrica, Econometric Society, vol. 88(4), pages 1411-1452, July.
    5. Wu, Mingqin & Yu, Linhui & Zhang, Junsen, 2023. "Road expansion, allocative efficiency, and pro-competitive effect of transport infrastructure: Evidence from China," Journal of Development Economics, Elsevier, vol. 162(C).
    6. 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.
    7. Redding, Stephen J. & Turner, Matthew A., 2015. "Transportation Costs and the Spatial Organization of Economic Activity," Handbook of Regional and Urban Economics, in: Gilles Duranton & J. V. Henderson & William C. Strange (ed.), Handbook of Regional and Urban Economics, edition 1, volume 5, chapter 0, pages 1339-1398, Elsevier.
    8. Gibbons, Stephen & Lyytikäinen, Teemu & Overman, Henry G. & Sanchis-Guarner, Rosa, 2019. "New road infrastructure: The effects on firms," Journal of Urban Economics, Elsevier, vol. 110(C), pages 35-50.
    9. Blouri, Yashar & Ehrlich, Maximilian V., 2020. "On the optimal design of place-based policies: A structural evaluation of EU regional transfers," Journal of International Economics, Elsevier, vol. 125(C).
    10. Xu, Yang & Yang, Xi, 2021. "Access to ports and the welfare gains from domestic transportation infrastructure," Journal of Urban Economics, Elsevier, vol. 126(C).
    11. Yang, Yang, 2017. "Transport Infrastructure, City Productivity Growth and Sectoral Reallocation: Evidence from China," RIEI Working Papers 2017-08, Xi'an Jiaotong-Liverpool University, Research Institute for Economic Integration.
    12. Roberts,Mark & Melecky,Martin & Bougna,Theophile & Xu,Yan-000462055, 2018. "Transport corridors and their wider economic benefits : a critical review of the literature," Policy Research Working Paper Series 8302, The World Bank.
    13. Mikhailova, Tatiana (Михайлова, Татьяна), 2018. "Evacuation of Industry During the Great Patriotic War and the Growth of Russian Cities: Numerical Analysis [Эвакуация Промышленности В Годы Великой Отечественной Войны И Рост Городов России: Числен," Working Papers 031835, Russian Presidential Academy of National Economy and Public Administration.
    14. Jose Asturias & Manuel García-Santana & Roberto Ramos, 2019. "Competition and the Welfare Gains from Transportation Infrastructure: Evidence from the Golden Quadrilateral of India," Journal of the European Economic Association, European Economic Association, vol. 17(6), pages 1881-1940.
    15. Stephen J. Redding & Esteban Rossi-Hansberg, 2017. "Quantitative Spatial Economics," Annual Review of Economics, Annual Reviews, vol. 9(1), pages 21-58, September.
    16. Das, Abhiman & Ghani, Ejaz & Grover, Arti & Kerr, William & Nanda, Ramana, 2024. "JUE insight: Infrastructure and Finance: Evidence from India’s GQ highway network," Journal of Urban Economics, Elsevier, vol. 142(C).
    17. Stephan Maurer & Ferdinand Rauch, 2023. "Economic geography aspects of the Panama Canal," Oxford Economic Papers, Oxford University Press, vol. 75(1), pages 142-162.
    18. Jie Bai & Jiahua Liu, 2019. "The Impact of Intranational Trade Barriers on Exports: Evidence from a Nationwide VAT Rebate Reform in China," CID Working Papers 373, Center for International Development at Harvard University.
    19. Bird, Julia & Straub, Stéphane, 2020. "The Brasília experiment: The heterogeneous impact of road access on spatial development in Brazil," World Development, Elsevier, vol. 127(C).
    20. Fenske, James & Kala, Namrata & Wei, Jinlin, 2023. "Railways and cities in India," Journal of Development Economics, Elsevier, vol. 161(C).
    21. Yang, Xiaolan & Wang, Rui & Guo, Dongmei & Sun, Weizeng, 2020. "The reconfiguration effect of China's high-speed railway on intercity connection ——A study based on media attention index," Transport Policy, Elsevier, vol. 95(C), pages 47-56.

    More about this item

    Keywords

    Trade Costs; Infrastructure; Panama Canal; Canada; Welfare effects;
    All these keywords.

    JEL classification:

    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • R42 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Government and Private Investment Analysis; Road Maintenance; Transportation Planning

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cii:cepidt:2017-02. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://edirc.repec.org/data/cepiifr.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.