Spatial Misallocation, Informality, and Transit Improvements: Evidence from Mexico City

Roman David Zarate Vasquez

No 9990, Policy Research Working Paper Series from The World Bank

Abstract: This paper proposes a new mechanism to explain resource misallocation in developing countries: the high commuting costs within cities that prevent workers from accessing formal employment. To test this mechanism, the paper combines a rich collection of microdata and exploits the opening of new subway lines in Mexico City. The findings show that transit improvements reduce informality by 7 percent in areas near the new stations. The paper develops a spatial model that accounts for the direct effects of infrastructure in perfectly economies and allocative efficiency. Changes in allocative efficiency driven by workers’ reallocation to the formal sector amplify the gains by 20–25 percent.

Date: 2022-03-30
New Economics Papers: this item is included in nep-iue, nep-tre and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://documents.worldbank.org/curated/en/09933230 ... 5520cd82c82a60a5.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:wbk:wbrwps:9990

Access Statistics for this paper

More papers in Policy Research Working Paper Series from The World Bank 1818 H Street, N.W., Washington, DC 20433. Contact information at EDIRC.
Bibliographic data for series maintained by Roula I. Yazigi ().