Spatial Effects of ‘Mill’ Closures: Does Distance Matter?

59 Pages Posted: 2 May 2019

See all articles by Arthur Grimes

Arthur Grimes

Motu Economic and Public Policy Research Trust

Chris Young

Motu Economic & Public Policy Research Trust

Multiple version iconThere are 2 versions of this paper

Date Written: July 1, 2009

Abstract

When small towns experience a major infrastructure shock, such as a ‘mill’ closure, the effects can be devastating. We analyse the effects of two major freezing works closures in New Zealand, in Patea (1982) and Whakatu (1986). These two examples provide an interesting comparison: Whakatu is located close to a city, while Patea is relatively isolated. We describe the impacts of these shocks on population, employment and house values in each town, relative to two sets of comparators. These descriptions allow us to contrast long-run trends and adjustment dynamics resulting from the differing locations of both towns. We find that both towns experience negative population and employment impacts; however, consistent with benefits of a near-city location, the effects on Whakatu are mainly temporary, whereas the effects on Patea are more permanent. Population age-groups respond very differently to the shocks, in ways that are consistent with homeownership being a factor stifling migration responsiveness in the face of a shock. The results have implications for regional development policy choices with respect to infrastructure location and also for programmes designed to stimulate homeownership.

Keywords: mill closures; rural infrastructure; homeownership

JEL Classification: R23, R28, R38, R53, R58

Suggested Citation

Grimes, Arthur and Young, Chris, Spatial Effects of ‘Mill’ Closures: Does Distance Matter? (July 1, 2009). Available at SSRN: https://ssrn.com/abstract=1477654 or http://dx.doi.org/10.2139/ssrn.1477654

Arthur Grimes (Contact Author)

Motu Economic and Public Policy Research Trust ( email )

19 Milne Terrace
Island Bay
Wellington 6002
New Zealand

Chris Young

Motu Economic & Public Policy Research Trust ( email )

Level 1, 93 Cuba Street
P.O. Box 24390
Wellington, 6142
New Zealand

HOME PAGE: http://www.motu.org.nz

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