Double-edged Trains: Economic outcomes and regional disparity of high-speed railways

Author Name YOO Sunbin (Kyushu University) / KUMAGAI Junya (Kyushu University) / KAWASAKI Kohei (Kyushu University) / HONG Sungwan (Pennsylvania State University) / ZHANG Bingqi (Kyushu University) / SHIMAMURA Takuya (Kyushu University) / MANAGI Shunsuke (Faculty Fellow, RIETI)
Creation Date/NO. June 2022 22-E-060
Research Project Institutional design for desirable acceptance of AI technology
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We illuminate the causal relationship between high-speed railway (HSR) expansions and economic development, focusing on HSR in Japan–the Shinkansen–from 1983 to 2020. To address endogeneity concerns about HSR station construction, we employ a market access approach that captures both the direct and indirect impacts of HSR expansion. The results show that a 1% increase in HSR market access increases the land price by 0.176%, income by 0.425%, and income per capita by 0.023% of Japan. However, most of the benefits are focused in Tokyo and other developed areas, while the economic growth due to HSR expansion of cities outside these areas is negative or statistically insignificant. We confirm the robustness of the results through the instrumental variable (IV) approach and a series of robustness checks. Next, we conduct counterfactual analyses using regression results to evaluate future Japanese HSR plans: the Linear Shinkansen, regional expansion, and a policy that would implement both. Simulation results reconfirm that future HSR plans will induce economic growth but, at the same time, aggravate regional disparity; thus, the expected economic outcomes may be double-edged.