TIME-SERIES ANALYSIS OF INTERACTIONS BETWEEN TRANSPORTATION AND MANUFACTURING AND RETAIL EMPLOYMENT

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