Estimating the Provincial Economic Impacts of High-speed Rail in Spain: An Application of Structural Equation Modeling

This paper presents the preliminary steps on an investigation about the impacts of the Spanish high-speed rail (HSR) network on the provincial economic development from 1990 to 2010 using a panel Structural Equation Modeling (SEM) formulation. The SEM model incorporates education level (proxied by number of people finished high-school or above) as the exogenous variable, endogenizes provincial accessibility brought by the introduction of the HSR service, and analyzes its long term impacts on the endogenous variables, employment and GDP, as well as the causal relationships among them. Panel structure helps to reveal the temporal effects with a time lag of 5 years. Comparison between SEM formulation and single-equation formulation is carried out in the paper as well to reveal the applicability and advantages of SEM formulation.