Investing in roads is not just about convenience

Better transportation infrastructure raised men's wages by 10% says study.

train 88 224 (photo credit: Sybil Ehrlich )
train 88 224
(photo credit: Sybil Ehrlich )
Investment into the improvement of roads and infrastructure over a certain period of time has increased commuting levels and helped to significantly raise men's wages, a new study by the Bank of Israel found. "The effect of infrastructure investments on the increase in commuting was largely evident among men and was small among women," stated the Bank of Israel report on Transport Infrastructure Investment, Commuting, and Wages. "Road investments that amplified commuting increased men's wages by 10 percent." The study, by Ronni Frish and Shai Tzur of the Bank of Israel Research Department, examined the effect of road and rail investment on commuting to a region other than the employees' region of residence. For the purpose of the research the country was divided into 50 natural regions. The research was based on changes in commuting between origin regions and destination regions between 1993 and 2003. It was found that during the studied period commuting increased and that the upturn was most typically found among men, the well-educated, and the young. Examining the effect of road investment on men's wages, the study found that the average road investment in the natural region and their main destination region (NIS 200 million in each region, in 1995 prices) increased men's wages in that region by 10%. By implication, the total road investment in 1992-2004 increased men's average wages countrywide by a similar increment. Frish and Tzur explained that proper transport infrastructures enhanced production by improving firms' access to potential workers, customers, and suppliers. The central bank's study analyzed the contribution of road and rail investments to the enhancement of firms' access to workers, which showed that accessibility allowed human capital to be used more efficiently, making it possible to narrow wage disparities between the periphery and the center. Frish and Tzur noted that the lack of adequate infrastructure reduced mainly workers' access to firms, leaving many workers to sit endlessly in traffic jams, while firms can redirect their activity vis-à-vis customers and suppliers to off-peak times of the day. "The share of commuters who entered the Tel Aviv region declined considerably and the share of commuters to regions close to Tel Aviv increased," the report found. Commuting expanded not only because of the increase in population growth but also due to an increase in road investment in the origin region and an increase in road investment in destination regions that are metropolitan, that are connected to the national railroad system, and that are traversed by the Cross-Israel Highway. "The cumulative investment in transport infrastructure between 1993 and 2003 explains about two-thirds of the total increase in commuting, which added up to 240,000 persons," the report stated. The contribution of investment into railways, which boosted the number of commuters by 18,000, was most evident between distant and non-contiguous regions. Road investment made most of its contribution to the increase in commuting between contiguous natural regions, while having no significant upward effect on commuting between regions that are farther away.