Road Maintenance and Local Economic Development: Evidence from Indonesia’s Highways
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 road...
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| creator | Gertler, Paul Gonzalez-Navarro, Marco Gracner, Tadeja Rothenberg, Alexander D |
| description | 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. |
| doi_str_mv | 10.3386/w30454 |
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| source | National Bureau of Economic Research Publications; Alma/SFX Local Collection |
| subjects | Budgeting Budgets Decision making Developing countries Development Economics Economic development Economic Fluctuations and Growth Economic theory Estimates Households Housing prices Infrastructure Job creation LDCs Provincial budget Public Economics Roads & highways |
| title | Road Maintenance and Local Economic Development: Evidence from Indonesia’s Highways |
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