The impact of high-speed railway on labor spatial misallocation—Based on spatial difference-in-differences analysis

Abstract

Existing studies neglected to assess the resource allocation effect of high-speed railway (HSR). This paper examines the impact of HSR on labor spatial misallocation in China by applying a modified spatial difference-in-differences approach, which identify local treatment effect, spillover effect on treated and untreated regions. The study finds: (1) Opening HSR alleviates not only the local labor misallocation but also the misallocation in surrounding areas to a greater extent, including cities with HSR (treatment group) and without HSR (control group), which contributes to the overall productivity increase. The spillover effect of HSR is larger than the direct effect. (2) The largest spillover effect occurs in adjacent areas near 350 km apart, while the spillover effect disappears beyond 500 km. (3) The direction and magnitude of HSR effect depend on the urban scale. For large-scale cities, the impact of opening HSR is greater versus small-scale ones. • A spatial DID model is applied to identify the impact of HSR on labor misallocation. • HSR mitigates the misallocation for both treated and non-treated regions nearby. • The spillover effect of HSR reaches the maximum at the distance of 350 kilometers. • The impact of HSR on misallocation varies by city scale.