Airport

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Airports and Urban Employment Scott Istvan scott.istvan@gmail.com (630) 433-6620 12/23/2011 Abstract: Airports are undeniably a cornerstone of our modern society. They allow inter-city economies of agglomeration to occur and are key to facilitating face-to-face contact. The question arises, however, of what exactly the effect of airport traffic is on a city. This article discusses studies by Brueckner and Percoco, which look at the impact of airports on service sector employment; a study by Green which attempts to show that airports cause population growth is also discussed. This article builds off the works of the other authors by examining the effect of passenger throughput at airports on more specific types of employment, and finds that airports have a significant impact on the service, finance, and tourism jobs. The article then discusses two case studies where new airports were built in an attempt to demonstrate the direction of causality, but the results are inconclusive due to the limited scope of the study.

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Table of Contents Introduction - 2 Literature Review - 5 Research Design - 11 Findings - 13 Cases - 18 Conclusion - 21 Appendices Appendix A: MSAs in sample - 22 Appendix B: Summary of Data - 25 Appendix C: Scatterplots of Employment on Passengers per Capita - 26 Works Cited - 28

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I. Introduction

Cities are still relevant even in this digital age because of the importance of face-to-face contact. Airports further facilitate face-to-face contact between cities and across countries. Glaeser (1992) mentions the importance of first nature advantages like ports in determining city growth. Building off of this, Freestone and Baker (2011) claim “airports are shaping urban space in the twenty-first century much as highways did in the twentieth century, railroads did in the nineteenth century, and seaports did in the eighteenth century” (Freestone and Baker 2011). Airports are not only important for the transportation of goods, but also for connecting people and ideas. Whereas previous long distance transportation methods have been primarily oriented toward less timesensitive goods, air travel has a low enough time-cost that it is practical for people to commute between multiple cities regularly.

Airports form the cornerstone of our modern, interconnected society. The benefits are often extolled by passengers, businesses, and politicians alike. Whether it is a family locating in a city with a large airport so they can have a variety of vacation options, a business picking a city with lots of daily flights to all of its customers, or a politician looking to create more jobs for his constituents, having an airport in the city is considered important. However, while people are very good at qualitatively describing the positives of an airport, one has to wonder if airports contribute as much as they are alleged to.

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This paper sets out to examine the effects airports, and specifically airport traffic, have on urban areas as a whole. Do they add jobs as many politicians say they will? Do people and businesses like having access to airports and thus flock to well-connected cities? The former will be answered with this paper, while the latter has been discussed by other authors and will be covered in the literature review.

While there are certainly negative externalities associated with airports (noise, pollution, and some moderate risks), they are not in the scope of this paper, and it is probably fair to assume that the positives far outweigh the negatives on the whole.

The goal of this paper is to show the effects airports have on cities in terms of employment and population growth. There is some literature on this topic already, which will be discussed in more detail in the next section. While the literature is very thorough and engaging, it is still not entirely clear whether airport growth causes urban growth or vice-versa. Thus, I have decided to examine some data on my own. My observations are...
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