Does congestion negatively affect income growth and employment growth? Empirical evidence from US metropolitan regions

Abstract

Traffic congestion has long been among the biggest economic problems in US metropolitan areas. Scholars have argued the importance of research focusing on transportation planning that aims to mitigate traffic congestion and reduce economic costs. However, most existing work has overlooked the interrelationship between congestion and economic components. With this perspective, this study seeks to explore the interrelationship between congestion, income, and employment. To this end, we focus on 86 US metropolitan areas by utilizing a simultaneous equation model. The results show that there is an interrelationship between income growth, employment growth, and congestion growth, but their effects are somewhat different between periods of the economic boom in the 1990s and the economic recession in the 2000s. In addition, our findings clearly show that traffic congestion growth negatively affects income growth and employment growth. It is suggested that transportation policy that aims to reduce traffic congestion could provide economic benefits in terms of increasing employment growth as well as income growth.