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Rural roads and urban agglomeration economies: Benefits for town and country?

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Abstract

Do urban agglomeration economies enhance the social profitability of rural roads? When all goods are traded at parametric world prices, lower transport costs benefit villagers. Urban activities and welfare are unaffected if labour is immobile, but their levels fall when rural workers move freely to take up urban jobs while remaining members of their extended families. In a closed, two-good economy with mobile labour, the effects of agglomeration economies depend on the substitutability of rural and urban goods.

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  • Clive Bell, 2018. "Rural roads and urban agglomeration economies: Benefits for town and country?," WIDER Working Paper Series wp-2018-73, World Institute for Development Economic Research (UNU-WIDER).
    • Handle: RePEc:unu:wpaper:wp-2018-73
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    1. Shahidur R. Khandker & Zaid Bakht & Gayatri B. Koolwal, 2009. "The Poverty Impact of Rural Roads: Evidence from Bangladesh," Economic Development and Cultural Change, University of Chicago Press, vol. 57(4), pages 685-722, July.
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    5. Jacoby, Hanan C, 2000. "Access to Markets and the Benefits of Rural Roads," Economic Journal, Royal Economic Society, vol. 110(465), pages 713-737, July.
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