A freeway to prosperity? Evidence from Calabria, South of Italy

This paper investigates the impact of the freeway “Salerno-Reggio Calabria” on long-term local economic development. Built between 1962 and 1974, the freeway connected the southernmost region of the Italian peninsula (Calabria) to the national highway network. According to the original plan, the freeway could have been built along three different routes. The final choice was mostly influenced by powerful politicians who lobbied in favor of the path crossing their constituency (the town of Cosenza). In a differences-in-differences framework, we compare the growth of “inconsequentially” treated municipalities – traversed only because they lie on the route connecting Cosenza – with the one of municipalities on the two discarded paths. Our results suggest that the freeway caused a significant reorganization of both economic activity and population from untreated to treated locations. At the same time, the infrastructure does not seem to have helped the convergence of the overall region. •We study the impact of a new freeway on long-term local economic development.•We provide evidence from a peripheral European region (Calabria, Italy).•Identification exploits the original plans, which envisioned three feasible routes.•The freeway caused a significant reorganization of population and economic activity.•But it does not seem to have helped the convergence of the overall region.