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A REEXAMINATION OF RESOURCE ALLOCATION RESPONSES TO THE 65-MPH SPEED LIMIT

Authors

  • Michael Greenstone

    1. Greenstone: NBER, and Assistant Professor, Department of Economics, University of Chicago, 1126 E. 59th St., Chicago, IL 60637. E-mail mgreenst@midway.uchicago.edu
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      I thank Orley Ashenfelter, David Card, Ted Gayer, David Lee, Gelen Levy, Enrico Moretti, Katherine Ozment, and Anne Piehl for valuab;e comments. Hilary Hoynes Generously shared a data file. Michael Park provided superb research assistance. The industrial Relations Section at Princeton University, the Alfred P. Sloan Doctoral Disseratation Fellowship, and the Robert Wood Johnson Foundation Generously supported this research.


Abstract

In a recent issue of Economic Inquiry (35[3]: 614–20) Lave and Elias (1997) contend that the 1987 increase in speed limits to 65 mph on rural interstate roads caused a reduction in statewide fatality rates. They argue that increased fatality rates on rural interstates were counterbalanced by declines on other roads due to compensatory reallocations of drivers and state police. This article is unable to find any empirical evidence of these reallocations. This removes the empirical basis for their hypothesis and implies that the effect of the 65-mph speed limit can be inferred from an analysis of rural interstates only. On these roads, fatality rates increased dramatically.

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