Policy Research

New highways as economic development tools: An evaluation using quasi-experimental matching methods

Terrance Rephann, Andrew Isserman

Summary

Researchers looked at counties who had an interstate highway constructed either within or near their county and compared them to twin counties without an interstate highway constructed. Urban spillover counties showed the most profound and sustained effects. The noncompetitive counties, those without a city or near a metropolitan area, exhibit little effect on total income or earnings. Additionally, those counties directly adjacent to interstate counties did experience detrimental effects.

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Policy Implications

These results suggest that interstate highways help the counties they are in but do little to boost economic activity on a larger scale. Highway construction does not improve economic activity across the board and actually harms counties next to interstate highway counties. Additionally, the most significant positive effects were in suburban areas, and these results support the idea that highway development benefits areas outside the city more than it does bring in revenue to the city itself.