Aviation Connectivity Impacts on Regional Economies in the United States

Abstract

This paper uses applied microeconomics techniques to investigate the impact of aviation connectivity on 548 regional economies in the United States. Using lagged socioeconomic variables to instrument for future aviation connectivity, the paper finds a significant impact of connectivity on long-run economic growth. An increase of 100 in the city’s Global Connectivity Index is associated with an increase in long-term total personal income of the city by up to $254,350,000, and up to 613 more jobs. For a city like Myrtle Beach, SC, with a connectivity index close to the mean connectivity levels of core-based statistical areas, a 100-point increase in the index represents a 1.03% increase in air connectivity. The paper also finds evidence suggesting that the impact of connectivity on regional economies is significantly more pronounced in the largest 100 cities, whereas these effects vanish in smaller cities.