Simultaneous Spatial Model of Highway-Employment for Economic Growth in Missouri

This paper analyzes the interdependency between highways and the industrial, manufacturing, and retail trade sectors in Missouri through a simultaneous highway-employment spatial econometric model. The coefficient on the highway variable of population is statistically significant and positive, but those of manufacturing and retail trade employment equations are insignificant. The coefficients on interstate highway accessibility are also all insignificant. Spatial lag coefficients on manufacturing employment and population equations are significantly positive. The manufacturing employment level within a county does not appear to have a positive effect on the employment level of retail trade, population, or wage in the neighboring counties. The employment of retail trade depends on the population in the neighboring counties. The county population increases with the employment level in retail trade and wages in the neighboring counties. The results show that highways in a particular county have negative effects on employment growth in manufacturing and retail trade within that county. However, highways within a county are important factors in attracting additional population. Highways in Missouri may aid in increasing wages rather than assisting households to increase the labor supply.