From periphery to core: measuring agglomeration effects using high-speed rail

Abstract

We analyze the economic impact of the German high-speed rail (HSR) connecting Cologne and Frankfurt, which provides plausibly exogenous variation in access to surrounding economic mass. We find a causal effect of about 8.5% on average of the HSR on the GDP of three counties with intermediate stops. We make further use of the variation in bilateral transport costs between all counties in our study area induced by the HSR to identify the strength and spatial scope of agglomeration forces. Our most careful estimate points to an elasticity of output with respect to market potential of 12.5%. The strength of the spillover declines by 50% ever 30 minutes of travel time, diminishing to 1% after about 200 minutes. Our results further imply an elasticity of per-worker output with respect to economic density of 3.8%, although the effects seem driven by worker and firm selection.

High‐speed railroads and economic geography: Evidence from Japan

“…For example, Ahlfeldt et al. () use SCM to estimate the impact of HSR on the local economic levels in Germany, which is closely related to our paper. SCM aims at constructing a counterfactual unit of a treated unit using the weighted average of a set of controls, after which the outcomes of the treated and counterfactual units are compared to evaluate the treatment impact.…”

“…Our findings are qualitatively consistent with a number of studies on HSRs in Europe, China, and Japan, even though they provide seemingly contradictory findings. Some studies, such as Qin (), find that noncore jurisdictions are weakened by HSR, while others such as Ahlfeldt and Feddersen (), Zheng and Kahn (), and Garcia‐López, Hémet, and Viladecans‐Marsal, find the reverse. However, they may be reconciled when we take into account the distances between noncore jurisdictions and core cities: when they are close, HSRs tend to promote diffusion; when they are far away, HSRs trigger agglomeration.…”

“…However, they may be reconciled when we take into account the distances between noncore jurisdictions and core cities: when they are close, HSRs tend to promote diffusion; when they are far away, HSRs trigger agglomeration. For example, the German (Frankfurt–Cologne) HSR, studied by Ahlfeldt and Feddersen (), is approximately 200 km, while the HSR destinations in China and Japan are commonly more than 500 km apart . Besides distance, the service sector is also understudied in the literature.…”

“…However, they may be reconciled when we take into account the distances between noncore jurisdictions and core cities: when they are close, HSRs tend to promote diffusion; when they are far away, HSRs trigger agglomeration. For example, the German (Frankfurt-Cologne) HSR, studied by Ahlfeldt and Feddersen (2017), is approximately 200 km, while the HSR destinations in China and Japan are commonly more 2 Existing theories analyzing the spatial impact of transport costs focus largely on the manufacturing sector (trade theory) and location preferences of residents (urban theory), and are motivated by traditional transport modes, especially trains and automobiles. Trade theory typically suggests that lower transport costs may lead to agglomeration (Fujita, Krugman, & Venables, 1999;Krugman, 1991;Ottaviano, Tabuchi, & Thisse, 2002), while urban theory often finds a decentralization effect within transport cost reduction, such as the monocentric urban models of Alonso (1964) and Fujita (1989).…”

Regional Disparities and Efficient Transport Policies

“…They find only limited evidence on the effect of interregional investments in the EU. Ahlfeldt and Feddersen (2015) study the impact of HSR on a corridor in Germany by comparing the effects on smaller towns with a HSR stop and those without such a stop. They find that, as HSR decreases the cost of human interaction but trade costs remain unchanged, this type of project has another effect on the core-periphery balance.…”