Infrastructure and Economic Development: Airport Capacity in Chicago Region, 2001–18

Abstract

In this paper an attempt is made to establish a relationship between airport capacity and economic development in the Chicago metropolitan area. Formulating a quantitative link between infrastructure and development has proven difficult. In the analysis adopted in this paper an association between employment growth and airport enplanements is used to provide the link. The employment data are then fed into an econometric input-output model of the region's economy to assess the impact of future capacity limitations on employment growth, income, and gross output in the Chicago region over the period 2001–18. The capacity is assumed to be disembodied (i.e., there is no prior assumption about expansion of existing facilities or the creation of a new, third airport). The results indicate that without additional capacity employment losses (jobs that would otherwise have been expected to be located in the region) would amount to 84,000 in 2001 (2.24% of estimated jobs for that year) rising to 522,000 in 2018 (11% of total jobs). In income terms the losses amount to 13.6% of total income in 2018 and gross output (the volume of goods and services produced) would be reduced by 16% in the same year.