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Migration, congestion externalities, and the evaluation of spatial investments

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  • Taryn Dinkelman
  • Sam Schulhofer-Wohl

Abstract

Evaluations of new infrastructure in developing countries typically focus on direct effects, such as the impact of an electrification program on household energy use. But if new infrastructure induces people to move into an area, other local publicly provided goods may become congested, offsetting the benefit of the infrastructure. We use a simple model to show how to measure the net benefit of a place-based program without data on land prices—an indicator that is commonly used to measure congestion in developed countries but that often cannot be used in poor countries because land markets are missing or land prices are badly measured. Our model shows that congestion externalities are especially large when land markets are missing. To illustrate, we estimate the welfare impact of a recent household electrification program in South Africa. Congestion externalities from migration reduced local welfare gains by half.

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Paper provided by Federal Reserve Bank of Minneapolis in its series Working Papers with number 700.

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Date of creation: 2012
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Handle: RePEc:fip:fedmwp:700

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Keywords: South Africa;

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  1. Chetty, Raj & Friedman, John Norton & Hilger, Nathanial & Saez, Emmanuel & Schanzenbach, Dianne Whitmore & Yagan, Danny, 2011. "How Does Your Kindergarten Classroom Affect Your Earnings? Evidence from Project Star," Scholarly Articles 9639983, Harvard Kennedy School of Government.
  2. Taryn Dinkelman, 2011. "The Effects of Rural Electrification on Employment: New Evidence from South Africa," American Economic Review, American Economic Association, vol. 101(7), pages 3078-3108, December.
  3. Lucas W. Davis, 2008. "The Effect of Power Plants on Local Housing Values and Rents: Evidence from Restricted Census Microdata," Working Papers, Massachusetts Institute of Technology, Center for Energy and Environmental Policy Research 0809, Massachusetts Institute of Technology, Center for Energy and Environmental Policy Research.
  4. Florencia DEVOTO & Esther DUFLO & Pascaline DUPAS & William PARIENTE & Vincent PONS, 2011. "Happiness on Tap: Piped Water Adoption in Urban Morocco," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 2011013, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
  5. Banerjee, Abhijit & Duflo, Esther & Qian, Nancy, 2012. "On the Road: Access to Transportation Infrastructure and Economic Growth in China," CEPR Discussion Papers 8874, C.E.P.R. Discussion Papers.
  6. Quigley, John M., 2008. "Urbanization, Agglomeration, and Economic Development," Berkeley Program on Housing and Urban Policy, Working Paper Series, Berkeley Program on Housing and Urban Policy qt6tf2s100, Berkeley Program on Housing and Urban Policy.
  7. Usher, Dan, 1977. "Public Property and the Effects of Migration upon Other Residents of the Migrants' Countries of Origin and Destination," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 85(5), pages 1001-20, October.
  8. Glaeser, Edward L., 2008. "Cities, Agglomeration, and Spatial Equilibrium," OUP Catalogue, Oxford University Press, Oxford University Press, number 9780199290444, October.
  9. Wildasin, David E, 1991. "Income Redistribution in a Common Labor Market," American Economic Review, American Economic Association, vol. 81(4), pages 757-74, September.
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Cited by:
  1. Breinlich, Holger & Ottaviano, Gianmarco & Temple, Jonathan, 2013. "Regional Growth and Regional Decline," CEPR Discussion Papers 9568, C.E.P.R. Discussion Papers.

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