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Paving Streets for the Poor: Experimental Analysis of Infrastructure Effects

Author

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  • Climent Quintana-Domeque
  • Marco Gonzalez-Navarro

Abstract

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 neighbourhoods 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 via 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

  • Climent Quintana-Domeque & Marco Gonzalez-Navarro, 2015. "Paving Streets for the Poor: Experimental Analysis of Infrastructure Effects," Economics Series Working Papers 757, University of Oxford, Department of Economics.
  • Handle: RePEc:oxf:wpaper:757
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    File URL: http://www.economics.ox.ac.uk/materials/papers/14063/paper-757.pdf
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    References listed on IDEAS

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    1. Marcelin Joanis, 2011. "The road to power: partisan loyalty and the centralized provision of local infrastructure," Public Choice, Springer, vol. 146(1), pages 117-143, January.
    2. Auriol, Emmanuelle & Warlters, Michael, 2012. "The marginal cost of public funds and tax reform in Africa," Journal of Development Economics, Elsevier, vol. 97(1), pages 58-72.
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    7. Banzhaf, H. Spencer & Farooque, Omar, 2013. "Interjurisdictional housing prices and spatial amenities: Which measures of housing prices reflect local public goods?," Regional Science and Urban Economics, Elsevier, vol. 43(4), pages 635-648.
    8. repec:wly:japmet:v:32:y:2017:i:2:p:233-254 is not listed on IDEAS
    9. van de Walle, Dominique, 2002. "Choosing Rural Road Investments to Help Reduce Poverty," World Development, Elsevier, vol. 30(4), pages 575-589, April.
    10. Gonzalez-Navarro, Marco & Quintana-Domeque, Climent, 2009. "The reliability of self-reported home values in a developing country context," Journal of Housing Economics, Elsevier, vol. 18(4), pages 311-324, December.
    11. Charles M. Tiebout, 1956. "A Pure Theory of Local Expenditures," Journal of Political Economy, University of Chicago Press, vol. 64, pages 416-416.
    12. Daniel P. McMillen & John McDonald, 2004. "Reaction of House Prices to a New Rapid Transit Line: Chicago's Midway Line, 1983-1999," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 32(3), pages 463-486, September.
    13. James G. Mackinnon & Matthew D. Webb, 2017. "Wild Bootstrap Inference for Wildly Different Cluster Sizes," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 32(2), pages 233-254, March.
    14. Katherine A. Kiel & Jeffrey E. Zabel, 1999. "The Accuracy of Owner-Provided House Values: The 1978-1991 American Housing Survey," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 27(2), pages 263-298.
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    Cited by:

    1. repec:eee:pubeco:v:152:y:2017:i:c:p:119-132 is not listed on IDEAS
    2. Pérez-Cervantes Fernando & Sandoval Hernández Aldo, 2015. "Estimating the Short-Run Effect on Market-Access of the Construction of Better," Working Papers 2015-15, Banco de México.
    3. Minhaj Mahmud & Yasuyuki Sawada, 2018. "Infrastructure and well-being: employment effects of Jamuna bridge in Bangladesh," Journal of Development Effectiveness, Taylor & Francis Journals, vol. 10(3), pages 327-340, July.
    4. Aoyagi, Keitaro & Sawada, Yasuyuki & Shoji, Masahiro, 2014. "Does Infrastructure Facilitate Social Capital Accumulation? Evidence from Natural and Artefactual Field Experiments in a Developing Country," Working Papers 65, JICA Research Institute.
    5. Duranton, Gilles & Venables, Anthony J, 2018. "Place-Based Policies for Development," CEPR Discussion Papers 12889, C.E.P.R. Discussion Papers.
    6. Kenneth Fortson & Randall Blair & Kathryn Gonzalez, 2015. "Evaluation of a Rural Road Rehabilitation Project in Armenia," Mathematica Policy Research Reports 3dad6663ad0343f28cb24633d, Mathematica Policy Research.
    7. Gunning, Jan Willem & Krishnan, Pramila & Mengistu, Andualem Telaye, 2018. "Fading Choice: Transport Costs and Variety in Consumer Goods," CEPR Discussion Papers 12910, C.E.P.R. Discussion Papers.
    8. Garbero, A. & Songsermsawas, T., 2018. "IFAD RESEARCH SERIES 31 - Impact of modern irrigation on household production and welfare outcomes: evidence from the participatory small-scale irrigation development programme (PASIDP) project in Eth," IFAD Research Series 280080, International Fund for Agricultural Development (IFAD).
    9. repec:eee:deveco:v:133:y:2018:i:c:p:375-395 is not listed on IDEAS
    10. Chen, Daniel L. & Yeh, Susan, 2016. "Government Expropriation Increases Economic Growth and Racial Inequality: Evidence from Eminent Domain," TSE Working Papers 16-693, Toulouse School of Economics (TSE).

    More about this item

    Keywords

    development; infrastructure; credit use; wealth effect; randomized controlled trial;

    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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