Airport Traffic and Metropolitan Economies

Abstract

While controlling for the unique and unobserved characteristics of cities, this paper assesses the impact of urban size, employment, and income on air traffic. Previous studies have established links between the socio-economic characteristics of cities and the volume of passenger and cargo traffic enplaned at their airports. Using the variations of population, employment, and income across urban areas, researchers have found that passenger enplanements have been proportional to city size and that they have increased with income and service sector employment. However, most earlier work relied on cross-section methods that ignored city-specific differences that may have influenced the drivers of air traffic. This paper is based on a 10-year quarterly panel of city-level economic and traffic measures, from which a city fixed-effects model is estimated. Thus, the results presented here shed light on the within-city effects that population, employment composition, and the average wage have on traffic and provide new insights into the determinants of air travel and goods movement. Controlling for the unobserved features of a metropolitan area, the paper confirms that passenger and cargo enplanements are proportional to population. Service sector employment and higher wages, indicating white-collar jobs, continue to induce both passenger and cargo transport, while a city's share of employment in manufacturing (blue-collar) jobs mostly affects cargo traffic. Furthermore, the fixed-effects results show that passenger enplanements exhibit more sensitivity to the proportion of urban workers providing nontradable services than to the share of workers in tradable service jobs.

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