UC Irvine

Modal innovations in transportation impact the entire transportation sector. Given transportation’s fundamental role in mediating trade, commerce, and human movement, these innovations also transform the intensity and distribution of economic activity.

Chapter 1 examines the impact of a new transportation mode on the use of existing modes, as well its impact on the rate of innovations within existing modes. The specific lens is Canal Age Britain, and due to the nature of the historical data we rely chiefly on OLS regressions. Chapters 2 and 3 concern the economic value of the most important modal innovation in the 20th century: the development of aviation. These chapters analyze the role of aviation in local growth. Chapter 2 does so by defining a novel measure of a city’s air-travel connectedness and analyzing Metropolitan Statistical Area growth from 2000-2007. Chapter 2 addresses endogeneity concerns through the use of instruments that build on the intuition of earlier scholarship. Chapter 3 exploits a unique air-subsidy program, the Essential Air Service program, to take further elucidate the economic importance of air travel. In Chapter 3 we are able to take a longer-term perspective, and endogeniety concerns are addressed through a Propensity Score Matching procedure