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School of Economics and Finance

No. 957: Urban Public Works in Spatial Equilibrium: Experimental Evidence from Ethiopia

Simon Franklin , Queen Mary University London
Clement Imbert , University of Warwick, BREAD, CEPR, EUDN and JPAL
Girum Abebe , World Bank
Carolina Mejia-Mantilla , World Bank

June 30, 2023

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Abstract

This paper evaluates a large urban public works program randomly rolled out across neighborhoods of Addis Ababa, Ethiopia. We find that the program increased public employment and reduced private labor sup-ply among beneficiaries and improved local amenities in treated locations. We then combine a spatial equilibrium model and unique commuting data to estimate the spillover effects of the program on private sector wages across neighborhoods: under full program roll-out, wages increased by 18.6%. Using our model, we show that welfare gains to the poor are six times larger when we include the indirect effects on private wages and local amenities.

J.E.L classification codes: I38, J61, O18, R23

Keywords:

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