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

Paul Gertler, Marco Gonzalez-Navarro, Tadeja Gracner and Alexander Rothenberg

No 30454, NBER Working Papers from National Bureau of Economic Research, Inc

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.

JEL-codes: J43 O18 R23 R42 (search for similar items in EconPapers)
Date: 2022-09
New Economics Papers: this item is included in nep-lma, nep-sea, nep-tre and nep-ure
Note: DEV EFG PE
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Citations: View citations in EconPapers (4)

Published as Paul J. Gertler & Marco Gonzalez-Navarro & Tadeja Gračner & Alexander D. Rothenberg, 2024. "Road maintenance and local economic development: Evidence from Indonesia’s highways," Journal of Urban Economics, vol 143.

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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 (2023)
Working Paper: Road Maintenance and Local Economic Development: Evidence from Indonesia's Highways (2022)
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