Motorways, local economic activity and commuting

This paper investigates the causal effects of the development of the Portuguese motorway network between 1981 and 2011 on the size of the local economy and the commuting of workers. We use instrumental variables based on transport networks from the late 18th century and 1945 as sources of pseudo-random variation for the location of motorways. The analysis shows that motorways have a strong effect on cross-municipal worker mobility, in terms of both incoming and outgoing commuters. We also find that motorways have a strong effect on the growth of business turnover and gross value added at the local level. Our results are robust to an extensive battery of sensitivity analyses.