Template-type: ReDIF-Paper 1.0

Author-Name: Paul J. Gertler
Author-Workplace-Name: University of California-Berkeley
Author-Workplace-Email: gertler@haas.berkeley.edu

Author-Name: Marco Gonzalez-Navarro
Author-Workplace-Name: University of California-Berkeley
Author-Workplace-Email: marcog@berkeley.edu

Author-Name: Tadeja Gracner
Author-Workplace-Name: RAND
Author-Workplace-Email: tgracner@rand.org

Author-Name: Alexander D. Rothenberg
Author-Workplace-Name: Syracuse University
Author-Workplace-Email: adrothen@syr.edu


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

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 1990Ð2007, 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.

Length: 82 pages

Creation-Date: 2023-12

File-URL: https://icepp.gsu.edu/files/2023/12/paper2327.pdf
File-Format: application/pdf

Handle: RePEc:ays:ispwps:paper2327