Airports and urban sectoral employment

This paper estimates the effects of airport infrastructure on relative sectoral employment at the metropolitan-area level, using data from the United States. To address the potential endogeneity in the determination of airport sizes, the 1944 National Airport Plan is used to instrument for the current distribution of airports. Airport size is found to have a positive effect on the employment share of tradable services, controlling for overall local employment, but no measurable effect on manufacturing or most non-tradable sectors. The effect of airport size on overall local employment is practically zero, suggesting that airports lead to specialization but not growth at the metropolitan-area level. The implied elasticity of tradable-service employment with respect to airport size is approximately 0.22. The results are relevant to the evaluation of airport construction or improvement projects that aim to benefit the local economy by making travel to and from the metropolitan area more convenient.