Year: 2016
Type: article
Abstract: This paper provides evidence of the effects of road quality on economic activity using temporal variation generated by road maintenance investments. A long panel of firms and households allows us to shed light on the effects of road quality for firms and pre-existing households. Methodologically, we propose a new road quality instrument using a nationwide panel dataset of road surface roughness to predict road quality from temporal variation in budgets exogenously allocated to different road maintenance authorities. We first show that higher road network quality leads to job creation in the manufacturing sector. We then show that this is reflected in household consumption and income. Third, we show evidence of an occupational shift from agriculture into manufacturing and improved profits for those who stay in agriculture. The gap in average income between agriculture and manufacturing employment is reduced with road quality but not eliminated. ∗The authors thank seminar participants at UC Berkeley, Millenium Challenge Corporation, the RAND Cor-poration, University of Toronto, and University of Ottawa for helpful comments and suggestions. This work was
Language: English
Subfield: Economics and Econometrics
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W2767705472