Urban Public Works in Spatial Equilibrium: Experimental Evidence from Ethiopia

This paper evaluates a large urban public works program randomly rolled out across neighborhoods of Addis Ababa, Ethiopia. We find that the program increased public employment and reduced private labor sup-ply among beneficiaries and improved local amenities in treated locations. We then combine a spatial equilibrium model and unique commuting data to estimate the spillover effects of the program on private sector wages across neighborhoods: under full program roll-out, wages increased by 18.6%. Using our model, we show that welfare gains to the poor are six times larger when we include the indirect effects on private wages and local amenities.