Highways, Market Access, and Spatial Sorting
We design a parsimonious spatial equilibrium model featuring workers embodied with heterogeneous skills and non-homothetic preferences. In equilibrium, locations with improved commuting access become relatively more attractive to high-income earners. We empirically analyse the effects of the construction of the Swiss highway network between 1960 and 2010 on the population size and composition of municipalities. We find that the advent of a new highway access led to a long-term 24% increase in the share of top-income taxpayers and a 8% decrease in the share of low-income taxpayers, impacting segregation by income. Highways also contributed to job and residential urban sprawl.
The Economic Journal
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Transportation, Highway, Market access, Income sorting.