Does Traffic Congestion Slow the Economy?

Abstract

Does traffic congestion negatively impact the economic growth of metropolitan areas? This article reviews the findings of three research directions addressing this question. First, research on first-order impacts indicates that the economic value of congestion-induced travel delay is tenuous since travelers adapt. Second, research on second-order impacts suggests that congestion slows metropolitan growth, inhibits agglomeration economies, and shapes economic geographies. Third, research on public-sector congestion mitigation policies identifies significant fiscal burdens despite limited success at reducing congestion. In sum, research on individual, business, and public-sector responses to congestion demonstrate a shift from congestion mitigation toward adaptation.