Road maintenance and local economic development: Evidence from Indonesia’s highways

Paul J. Gertler, Marco Gonzalez-Navarro, Tadeja Gračner and Alexander D. Rothenberg

Journal of Urban Economics, 2024, vol. 143, issue C

Abstract: This paper estimates the local welfare impacts of highway maintenance investments. We instrument road quality exploiting Indonesia’s two-step budgeting process for allocating funding to local road authorities. Using comprehensive data on road quality from 1990–2007, we find evidence that better roads help manufacturers create new jobs, enabling worker transitions out of informal employment, and increasing labor income. Road quality also changes the cost of living, reducing perishable food prices but also raising housing prices. We estimate the elasticity of household welfare with respect to road quality to be 0.1 and the benefit/cost ratio for road maintenance investments to be 2.3.

Keywords: Transport infrastructure; Road maintenance; Economic development (search for similar items in EconPapers)
JEL-codes: J43 O18 R23 R42 (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
Working Paper: Road Maintenance and Local Economic Development: Evidence from Indonesia's Highways (2023)
Working Paper: Road Maintenance and Local Economic Development: Evidence from Indonesia's Highways (2022)
Working Paper: Road Maintenance and Local Economic Development: Evidence from Indonesia’s Highways (2022)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:juecon:v:143:y:2024:i:c:s0094119024000573

DOI: 10.1016/j.jue.2024.103687

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