Welfare economic impacts of transportation improvements in a peripheral region

Abstract

We set out to investigate whether transportation improvements can trigger welfare economic impacts in a peripheral region. The paper addresses this issue through the development of a general equilibrium labor market model with a transportation component. The model is implemented to a set of 101 core and peripheral cities in Israel. Numeric simulations are carried out to test the research hypotheses regarding positive relationship between improved accessibility and enhanced economic welfare. Economic welfare is measured in terms of efficiency and equity impacts. The results of the simulations show that transportation improvements in the form of auto travel time reductions may lead to substantial welfare benefits in the peripheral region considered in terms of increased output, productivity and wages.