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Paving Streets for the Poor: Experimental Analysis of Infrastructure Effects

Author

Listed:
  • Marco Gonzalez-Navarro

    (University of Toronto and J-PAL)

  • Climent Quintana-Domeque

    (University of Oxford and IZA)

Abstract

We provide the first experimental estimation of the effects of the supply of publicly financed urban infrastructure on property values. Using random allocation of first-time street asphalting of residential streets located in peripheral neighborhoods in Mexico, we show that within two years of the intervention, households are able to transform their increased property wealth into significantly larger rates of vehicle ownership, household appliances, and home improvements. Increased consumption is made possible by both credit use and less saving. A cost-benefit analysis indicates that the valuation of street asphalting as capitalized into property values is about as large as construction costs.

Suggested Citation

  • Marco Gonzalez-Navarro & Climent Quintana-Domeque, 2016. "Paving Streets for the Poor: Experimental Analysis of Infrastructure Effects," The Review of Economics and Statistics, MIT Press, vol. 98(2), pages 254-267, May.
    • Handle: RePEc:tpr:restat:v:98:y:2016:i:2:p:254-267
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    Keywords

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    JEL classification:

    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure

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