The Babeldaob Road: The Impact of Road Construction on Rural Labor Force Outcomes in the Republic of Palau

28 Pages Posted: 30 Nov 2006

See all articles by Randall Akee

Randall Akee

IZA Institute of Labor Economics

Date Written: November 2006

Abstract

This research examines the impact of road construction on rural labor force outcomes in a developing country. A new road built in the Republic of Palau links formerly inaccessible rural areas to more urban wage sector employment. We use two censuses conducted five years apart which perfectly bracket the road construction period. The data allow us to identify households that moved in the intervening five year period, thereby correcting any endogenous movement attributable to the road construction. Utilizing a difference-in-difference regression strategy and matched panel data, we find that households impacted by the new road construction tend to increase their wage sector employment, decrease their self-employment in agriculture, decrease the number of international migrants sent abroad and increase their ownership of automobiles. The findings also show that inequality decreases both within and between regions. The impact of road construction on average household wages and income is negligible.

Keywords: infrastructure, economic development, rural labor force

JEL Classification: O18, R29, R40

Suggested Citation

Akee, Randall, The Babeldaob Road: The Impact of Road Construction on Rural Labor Force Outcomes in the Republic of Palau (November 2006). IZA Discussion Paper No. 2452, Available at SSRN: https://ssrn.com/abstract=947515 or http://dx.doi.org/10.2139/ssrn.947515

Randall Akee (Contact Author)

IZA Institute of Labor Economics ( email )

P.O. Box 7240
Bonn, D-53072
Germany

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