Urban Public Works in Spatial Equilibrium: Experimental Evidence from Ethiopia
American Economic Review
vol. 114,
no. 5, May 2024
(pp. 1382-1414)
Abstract
This paper evaluates a large urban public works program randomly rolled out across neighborhoods of Addis Ababa, Ethiopia. We find the program increased public employment and reduced private labor supply 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 rollout, wages increased by 18.6 percent. 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.Citation
Franklin, Simon, Clément Imbert, Girum Abebe, and Carolina Mejia-Mantilla. 2024. "Urban Public Works in Spatial Equilibrium: Experimental Evidence from Ethiopia." American Economic Review, 114 (5): 1382-1414. DOI: 10.1257/aer.20220471Additional Materials
JEL Classification
- H76 State and Local Government: Other Expenditure Categories
- I38 Welfare, Well-Being, and Poverty: Government Programs; Provision and Effects of Welfare Programs
- J22 Time Allocation and Labor Supply
- J31 Wage Level and Structure; Wage Differentials
- O15 Economic Development: Human Resources; Human Development; Income Distribution; Migration
- O18 Economic Development: Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
- R23 Urban, Rural, Regional, Real Estate, and Transportation Economics: Regional Migration; Regional Labor Markets; Population; Neighborhood Characteristics