Frontier Economics has completed an evidence review, commissioned by the Department for Transport (DfT), analysing how transport policies and investments influence economic outcomes.

Reviewing recent, robust academic research, Frontier assessed the impact road, rail, public and active transport interventions have had on unemployment and inactivity, productivity, gentrification and new towns. Across these areas, best practice for handling the issue of transport interventions displacing economic activity was also considered. 

The key findings include:

·       Unemployment and inactivity: Transport investments are associated with employment growth, though the evidence suggests they can displace employment from neighbouring areas. There is limited evidence on the long-term impacts on unemployment and inactivity specifically.

·       Agglomeration and productivity: Transport investments are associated with increased labour and firm productivity. There is tentative evidence suggesting that higher-productivity firms cluster near new transport facilities, with less productive firms leaving the area. The evidence on the impacts on neighbouring areas' productivity is however inconclusive.

·       Gentrification: This often refers to less affluent residents being crowded out by more affluent ones. Impact-wise, transport investments consistently lead to higher house prices. When papers analyse socio-economic and demographic changes in areas, the results are inconclusive. It appears that different transport modes influence gentrification differently, with light rail, tram, and metro investments as part of mixed use developments seemingly more likely to lead to gentrification than the extension of bus lines.  

·       New towns: Limited research exists on transport investments in publicly-planned new towns, with most coming from a few studies of Hong Kong. Additional research is needed in this area.

Overall, across employment, productivity and gentrification, there is evidence of varying strength that displacement takes place following transporting interventions. Whether the effects are net positive, neutral or negative for the outcome of study is, however, unclear.

Based on the findings, our report made several recommendations for policymakers. These included the need for a broader geographical analysis of transport interventions to capture displacement effects, the use of micro-level data at the individual level to assess distributional impacts in both the area impacted by the intervention and those adjacent, and a recognition that impacts are likely differ across transport modes, scale, type of user and local context. Further research was recommended into:

·       The impact of transport investments on unemployment and inactivity specifically, not just employment.

·       Understanding the productivity effects of specific transport interventions, rather than general transport connectivity.

·       Conducting robust studies at level 4 or above on the Maryland Scientific Methods Scale that investigate the relationship between transport investments and gentrification.

·       The relevance of the literature pertaining to new towns arising in developing countries and / or whether studies exploring these links within the UK should be commissioned.

Click here to read the full report: The Economic Impacts of Transport Interventions