Highway expenditures and non-metropolitan employment

Using data on state highway expenditures and employment from 30 Minnesota non-metropolitan counties over a 25-year period, possible interactions between transportation and employment are investigated. While crosssectional analysis suggests no significant interactions, causality tests and time-series analyses indicate that highway expenditures affect manufacturing and retail employment, and employment influences expenditures. Although expenditure increases cause employment improvements in the short-term, long-term effects are less favorable. Highway expenditures respond quickly to increased needs caused by retail improvements.