Is There a Link Between Highway Funding, Construction Costs and Employment

摘要

The challenges facing the U.S. highway system are immense. First, there has been a marked deterioration in the existing infrastructure due to delayed maintenance. Second, transportation demands are much greater than before and the cost of congestion has increased accordingly. Third, the economic crisis has led to large budget deficits, and despite the recent burst of stimulus-related budget increases, the prognosis for future funding is uncertain. Perhaps at no other time since the inception of the interstate system has there been such a keen interest to maximize the effectiveness of government highway spending. This study contributes to this interest by examining the relationship between government highway expenditures and construction costs. If, for example, an increase in government highway spending leads to an increase in construction costs, will this diminish the effectiveness of the spending in maintaining or improving infrastructure. Knowledge of the spending-cost relationship can assist policy makers with the design and implementation of capital and maintenance programs. In the current economic environment, an additional interest is in quantifying how effective highway spending is at creating employment. Estimates of that relationship are included herein.