The Price of Remoteness: Product Availability and Local Cost of Living in Ethiopia

53 Pages Posted: 25 Mar 2020

See all articles by Julien Martin

Julien Martin

University of Quebec at Montreal (UQAM)

Florian Mayneris

Catholic University of Louvain (UCL) - Center for Operations Research and Econometrics (CORE)

Ewane Theophile

University of Quebec at Montreal (UQAM)

Date Written: March 2020

Abstract

This paper uses the microdata underlying the Ethiopian CPI to examine the spatial dispersion in local prices and availability of 400 items across more than 100 cities. We first show that remote cities face higher prices for individual products and have access to fewer products. All else equal, large cities also face higher individual prices but enjoy access to a wider set of products. To assess the welfare implications of these micro patterns, we then examine the impact of remoteness and population size on aggregate cost-of-living indexes that account for product availability. We find the cost of living is higher in remote areas, but not systematically related to population size. We then show spatial differences in the cost of living are a significant determinant of migration flows across Ethiopian regions. The impact of cost of living mainly channels through spatial differences in product availability.

Suggested Citation

Martin, Julien and Mayneris, Florian and Theophile, Ewane, The Price of Remoteness: Product Availability and Local Cost of Living in Ethiopia (March 2020). CEPR Discussion Paper No. DP14515, Available at SSRN: https://ssrn.com/abstract=3560323

Julien Martin (Contact Author)

University of Quebec at Montreal (UQAM) ( email )

PB 8888 Station DownTown
Succursale Centre Ville
Montreal, Quebec H3C3P8
Canada

Florian Mayneris

Catholic University of Louvain (UCL) - Center for Operations Research and Econometrics (CORE) ( email )

34 Voie du Roman Pays
B-1348 Louvain-la-Neuve, b-1348
Belgium

Ewane Theophile

University of Quebec at Montreal (UQAM) ( email )

PB 8888 Station DownTown
Succursale Centre Ville
Montreal, Quebec H3C3P8
Canada

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