Do fixed links affect the local labour markets and industries? A case study of three fixed link projects in Norway

In this article we investigate three islands that get connected by a fixed link project with regards to changes in the local labour market and industries. Firstly, a difference in difference method was used to calculate changes, and trend shifts within accompanying variables were detected. Secondly, interviews of affected industries were also carried out to test our hypothesis. Our analysis shows that.•We investigate changes the local labour market and industries for three islands that were connected by a fixed link.•There is an increase in the number of commuters between the connected islands and the mainland.•There is growth in the total number of employees.•There is a growth in the total number of firms in all connected islands.•The newly connected islands seem to attract more firms than before.

The interaction between infrastructure improvement and regional economic growth has been a key question within transport research for decades. The size of these benefits, and if they actually materialize, is still a question for debate. Further knowledge within this field is essential because many countries are in the process of including these additional economic benefits in their cost benefit analyses. There is consensus in the literature that focus should be on ex-post analysis at a firm level for projects that dramatically change accessibility. However, the number of studies following these recommendations is scarce. This paper contributes to fill the gap by analysing indications of potential agglomeration benefits for 19,000 firms affected by three fixed link projects that connect islands to the mainland. We compare them to similar areas that do not get a connection and identify changes in the local labour market and industries. Firstly, a difference in difference method was used to calculate changes, and trend shifts within accompanying variables were detected. Secondly, interviews of affected industries were also carried out to test our hypothesis. Our analysis shows that (1) there is an increase in the number of commuters between the connected islands and the mainland. (2) There is growth in the total number of employees and (3) in the total number of firms in all connected islands. (4) The newly connected islands seem to attract more firms than before. (5) However, we find small changes in firm turnover, suggesting that increased competition offsets the number of new customers a fixed link might provide.