Granting airport concessions for regional development: Evidence from Peru

Abstract

Airport activity has been linked with economic development in urban areas, and with their improved facilities (by construction or expansion), given the importance of connecting territories and the positive externalities for society. We investigate whether the change in airport ownership and management control has a direct effect on regional airports performance and catalytic effects on regional employment. By employing an interrupted time series evaluation design we address some threats to internal validity such as history and selection bias. Then with a difference-in-differences estimation technique, unbiased estimates of the causal effect for a concession policy on regional airports activity and regional sectoral employment are provided. Our main results suggest that regions with granted airport concessions exhibit higher airport activity and sectoral employment than regions with non-granted airport concessions; and, after controlling for different covariates (macroeconomic, socio-economic and infrastructure characteristics), regions with granted airport concessions have mainly higher aircraft movements, and more goods and hotels and restaurants sectoral employment than regions with non-granted airport concessions.