Paving streets for the poor: experimental analysis of infrastructure effects

Journal article

We provide the first experimental estimation of the effects of the supply of publicly financed urban infrastructure on property values. Using random allocation of first-time street asphalting of residential streets located in peripheral neighborhoods in Mexico, we show that within two years of the intervention households are able to transform their increased property wealth into significantly larger rates of vehicle ownership, household appliances, and home improvements. Increased consumption is made possible via both credit use and less saving. A cost-benefit analysis indicates that the valuation of street asphalting as capitalized into property values is about as large as construction costs.

Authors: Quintana-Domeque, C; Gonzalez-Navarro, M

• Publication status: Accepted
• Peer review status: Peer reviewed
• Publisher: Massachusetts Institute of Technology Press
• Journal: Review of Economics and Statistics
• Acceptance date: 2015-09-16
• EISSN: 1530-9142
• ISSN: 0034-6535
• Keywords: credit use; development; infrastructure; wealth effect; randomized controlled trial