This study examines the contribution of road and rail investment to the increase in economic activity in Israel. We focus on the contribution to the increase in commuting–– daily travel from home to work by people whose workplace is not in the district where they live––because the bottleneck of the transport system occurs in the morning and afternoon rush hours when people travel to and from work. We estimate a model at the level of natural districts (of which Israel has fifty), and this shows that total infrastructure investment in 1993–2003 explains about two-thirds of the total increase of 240,00 commuters in that period, with men accounting for most of the increase. Using data on the different districts we also examined the impact of total road investment in 1992–2004 on men's wage level, and found that the investment increased wages by 10–14 percent.

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