The local impacts of building a large motorway network: Urban growth, suburbanisation, and agglomeration

Portugal moved from having less than 200 km of motorways in the early 1980s to having the fourth highest motorway density relative to population in the European Union in 2019. This paper studies the relationship between the development of the Portuguese motorway network between 1981 and 2011 and the growth of population and employment at the local level. We address the endogeneity of the geography of motorways using instrumental variables based on a map of dirt roads from the late 18th century and the main roads of a 1945 road plan. Our findings suggest that, on average, motorways caused large increases in population – and even larger increases in employment – in the municipalities that received them. We also find that motorways contributed to suburbanisation, as the impact of motorways on population growth (but not on employment growth) is stronger in suburban municipalities. Another important nonlinearity is that motorways appear to have influenced urban agglomeration dynamics, as their effect on the growth of the local population between 1981 and 2011 depends on the size of the local population in 1970.