Journal Article

Nobody’s gonna slow me down? The effects of a transportation cost shock on firm performance and behavior

Authors

  • Dirk Dohse
  • João Pereira dos Santos
  • Catarina Branco
  • José Tavares
Publication Date

We study the firm-level responses to a substantial increase in transportation costs in the wake of a quasi-experiment that introduced tolls in a subset of Portuguese highways. Exploiting a unique dataset encompassing the universe of Portuguese private firms, we find that the introduction of tolls caused a substantial decrease in turnover (-10.2%) and productivity (-4.3%) in treated firms vis-à-vis firms in the comparison group. In response to the tolls, firms substantially cut employment-related expenses and purchases of other inputs. Labor costs were reduced by both employment cuts and a decrease in average wages. While firms did not increase inventory, there is some evidence for increased firm exit, in particular by firms in tradables sectors.

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Info

JEL Classification
R48; L25; R12
DOI
10.1016/j.jue.2023.103569

Key Words

  • firm behavior
  • firm performance
  • infrastructure
  • location
  • Portugal
  • Road tolls