Do Roadworks Benefit Road Users? Evidence from California Freeways

Abstract

This paper estimates the effects of roadwork on traffic volume and speed using a newly constructed panel data on all freeways in California. A roadwork changes the quality of the freeway, shifting its cost curve and thus allowing us to identify the freeway demand curves. The evidence indicates that roadworks tend to increase the freeway speed shortly after the roadwork. However, this effect does not last longer than 1 year, because the increased speed induces more uses of the freeway, eliminating the short-run effect on the speed, a finding that supports the induced-demand hypothesis of Downs (1962, 1992). This paper also quantifies the marginal benefit of roadwork expenditures in California to evaluate public spending on freeways. It is concluded that roadworks' congestion-relieving effect alone is not enough to justify the state's large expenditures on roadworks.