Road Maintenance and Local Economic Development: Evidence from Indonesia's Highways

Paul J. Gertler, Marco Gonzalez-Navarro, Tadeja Gracner and Alexander Rothenberg
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Paul J. Gertler: University of California-Berkeley
Tadeja Gracner: RAND

International Center for Public Policy Working Paper Series, at AYSPS, GSU from International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University

Abstract: This paper estimates the local welfare impacts of highway maintenance investments. We instrument road quality exploiting IndonesiaÕs two-step budgeting process for allocating funding to local road authorities. Using comprehensive data on road quality from 1990à 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 0.09 and the benefit/cost ratio for road maintenance investments to be 1.8.

Pages: 82 pages
Date: 2023-12
New Economics Papers: this item is included in nep-sea, nep-tre and nep-ure
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https://icepp.gsu.edu/files/2023/12/paper2327.pdf (application/pdf)

Related works:
Journal Article: Road maintenance and local economic development: Evidence from Indonesia’s highways (2024)
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:ays:ispwps:paper2327

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