Title

Infrastructure’s Effect on Growth and Wages Over Time: An Application to Intermodal Rail

Publication Date

April 2017

Advisor(s)

Christiaan Hogendorn

Language

English (United States)

Abstract

In the past decades, there has been much discussion about inequality and the lack of growth in the economy. In 2016, a critically acclaimed book by Robert Gordon predicted that the era of great inventions and their economic windfalls is over. My thesis considers this prediction’s validity. In my thesis I focus on general-purpose technologies (GPTs) and their potential to provide economic benefits. I consider two characteristics of GPTs, which are critically important when considering their ability to be great inventions: their diffusion lag and their openness and complementarity. I use the example of two GPTs throughout my thesis: the Internet, and intermodal railroads. Both are used for transportation, one for digital goods and the other for physical goods. I consider their ability to increase wage growth as well as their propensity to increase inequality. In my empirical research, I consider a study by Forman et al. (2012) that suggested that Internet infrastructure increase wage inequality and does little to increase wages in low-income areas. I replicate Forman et al. (2012)’s analysis and add a comparable study including intermodal railroads. My results suggest that intermodal rail does raise local wages and does not produce as much inequality as Internet infrastructure. My empirical results are significant because government policy largely affects infrastructure investment and needs better tools to assess the economic impact.

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