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Paving Streets for the Poor: Experimental Analysis of Infrastructure Effects

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  • Climent Quintana-Domeque
  • Marco Gonzalez-Navarro

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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    More about this item

    Keywords

    development; infrastructure; credit use; wealth effect; randomized controlled trial;
    All these keywords.

    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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