The Impact of an International Bridge on Households: Evidence from Household Panel Data in Thailand

Discussion Papers

No.794

by Kazunobu Hayakawa, Souknilanh Keola, Sasatra Sudsawasd, Kenta Yamanouchi

June 2020

ABSTRACT

This paper empirically investigates the impact of an international bridge being constructed between Thailand and Laos on household behavior in Thailand. Our empirical results suggest that the establishment of an international bridge boosted the growth in Thailand of the industry in which the country had a comparative advantage, i.e., agriculture. Therefore, this industry enjoyed positive effects from the bridge’s construction. Specifically, we discovered that income, especially farm income, rose in households headed by a male or a young person. Furthermore, the bridge’s construction also increased the amount of agricultural land, the number of agricultural workers, and household debt ratios. On the other hand, income decreased in households with a female or an elderly head. To address possible endogeneity issues on the choice of the bridge’s location, we restricted this study to specific provinces. We also controlled for several confounding factors and conducted placebo tests to confirm the robustness of our results.

Keywords: International bridge, Trade liberalization, Household

JEL classification: F10, H54, G51

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