National transportation networks, market access, and regional economic growth

I estimate interregional transportation's effect on local economic activity by studying the Interstate Highway System. To estimate transportation's effects on county employment and wages, I develop a new instrumental variables strategy: isolating market access growth caused by incidental connections to rural counties. I find that through market access highways increased employment, had small and delayed wage effects, and that instruments correct for downward bias. A structural model interprets reduced-form results as agglomeration and congestion forces strengthening after 1980. Counterfactual simulations suggest that Interstates' effects were highly heterogeneous and that additions to early Interstate plans were less valuable than the system's core.