Air connectivity and regional employment: a spatial econometrics approach

While there is ample evidence for the existence of positive wider economic impacts of air transportation, the associated spatial distribution of these impacts has received less attention. This paper uses a spatial-econometric approach with instrumental variables on European NUTS-3-level panel data to study the spatial distribution of the impacts of air transport access on a subset of service-sector employment that is not directly affected by activity in the aviation industry. While the spatially resolved approach confirms previous findings that regions close to an airport experience service-sector employment increases due to improved air transport access, we also find evidence for the presence of an agglomeration shadow, that is, negative employment effects for regions further away from an airport. The average total impact of connectivity increases on service employment is found to be positive.