In many countries, highway construction occurs nowadays mainly through expansions – adding new lanes to existing corridors – rather than through construction of new greenfield highways. The economic effects of expansions have hardly been studied. We estimate the effect of these expansions on employment, population and prices of residential and commercial real estate at a detailed spatial level. We exploit information about highway expansions during a period of 25 years for the Netherlands. Our identification strategy uses that the precise construction year of expansions is highly random. We demonstrate that highway expansions rather quickly – within 3 to 5 years after the expansion – induce a redistribution of local employment. Adding 10 km lane increases employment within 5 km of the highway by 3 percent, but reduces employment further away. We find no effect on population. Local benefits of expansions are reflected in prices of residential and commercial real estate: these rise with 3 to 8% with each additional 10 km lane in the vicinity of a location. Our results contribute to the ongoing public discussion about the local costs and benefits of highway investments. Joint with Jos van Ommeren and Henk van Mourik.