The Impact of Improved Passenger Transport System on Manufacturing Plant Productivity
- The Impact of Improved Passenger Transport System on Manufacturing Plant Productivity
- Baek, Jisun
- passenger transport; transportation infrastructure; productivity; high-speed train; plant-level; difference-in-difference
- Issue Date
- Series/Report no.
- KDI Working Paper Series;WP15-02
- In this paper, we examine the effect of transportation infrastructure on the productivity
of manufacturing plants. In particular, we analyze whether improved passenger
transportation connections to metropolitan cities positively affects manufacturing plant
productivity in non-metropolitan counties. The recent introduction of the Korea Train
eXpress(KTX) high-speed train allows us to study the causal impact of improved passenger
transport. We apply a difference-in-differences framework to plant-level data, by
exploiting the exogenous timing of high-speed train introduction and the location of the
new KTX stations which have not been altered endogenously. Specifically, we compare
the plants in counties without high-speed train stations with those in the counties with
high-speed train stations. The empirical results suggest an increase of approximately
4.6 percent in the productivity of manufacturing plants due to the introduction of the
high-speed train. Our analysis suggests this might have resulted from increased ability
to recruit highly skilled younger workers to the manufacturing plants connected by the
KTX high-speed train.
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