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The Babeldaob Road: The Impact of Road Construction on Rural Labor Force Outcomes in the Republic of Palau

  • Akee, Randall K. Q.

    ()

    (University of California, Los Angeles)

This research examines the impact of road construction on rural labor force outcomes in a developing country. A new road built in the Republic of Palau links formerly inaccessible rural areas to more urban wage sector employment. We use two censuses conducted five years apart which perfectly bracket the road construction period. The data allow us to identify households that moved in the intervening five year period, thereby correcting any endogenous movement attributable to the road construction. Utilizing a difference-in-difference regression strategy and matched panel data, we find that households impacted by the new road construction tend to increase their wage sector employment, decrease their self-employment in agriculture, decrease the number of international migrants sent abroad and increase their ownership of automobiles. The findings also show that inequality decreases both within and between regions. The impact of road construction on average household wages and income is negligible.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 2452.

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Length: 28 pages
Date of creation: Nov 2006
Date of revision:
Handle: RePEc:iza:izadps:dp2452
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  1. Giles, John, 2006. "Is life more risky in the open? Household risk-coping and the opening of China's labor markets," Journal of Development Economics, Elsevier, vol. 81(1), pages 25-60, October.
  2. Antonio Estache, 1994. "World Development Report: Infrastructure for Development," ULB Institutional Repository 2013/44144, ULB -- Universite Libre de Bruxelles.
  3. Gibson, John & Rozelle, Scott, 2003. "Poverty and Access to Roads in Papua New Guinea," Economic Development and Cultural Change, University of Chicago Press, vol. 52(1), pages 159-85, October.
  4. Peter Warr, 2005. "Roads and Poverty in Rural Laos," Departmental Working Papers 2005-04, The Australian National University, Arndt-Corden Department of Economics.
  5. Jyotsna Jalan & Martin Ravallion, 1998. "Geographic Poverty Traps?," Boston University - Institute for Economic Development 86, Boston University, Institute for Economic Development.
  6. Van de Walle, Dominique, 2000. "Choosing rural road investments to help reduce poverty," Policy Research Working Paper Series 2458, The World Bank.
  7. Steven Were Omamo, 1998. "Transport Costs and Smallholder Cropping Choices: An Application to Siaya District, Kenya," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 80(1), pages 116-123.
  8. Jacoby, Hanan G., 1998. "Access to markets and the benefits of rural roads," Policy Research Working Paper Series 2028, The World Bank.
  9. Akee, Randall K. Q., 2007. "Who Leaves and Who Returns? Deciphering Immigrant Self-Selection from a Developing Country," IZA Discussion Papers 3268, Institute for the Study of Labor (IZA).
  10. Binswanger, Hans P. & Khandker, Shahidur R. & Rosenzweig, Mark R., 1993. "How infrastructure and financial institutions affect agricultural output and investment in India," Journal of Development Economics, Elsevier, vol. 41(2), pages 337-366, August.
  11. Van de Walle, D., 1996. "Infrastructure and Poverty in Vietnam," Papers 121, World Bank - Living Standards Measurement.
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