Urban Public Works in Spatial Equilibrium: Experimental Evidence from Ethiopia

64 Pages Posted: 9 Nov 2021

See all articles by Girum Abebe

Girum Abebe

University of Westminster - Policy Studies Institute

Simon Franklin

Queen Mary University of London

Clément Imbert

University of Warwick

Carolina Mejia-Mantilla

World Bank

Date Written: November 1, 2021

Abstract

This paper evaluates Ethiopia's Urban Productive Safety Net Program, which provides employment on local public works to the urban poor, and was rolled out randomly across neighborhoods of Addis Ababa. We find that the program increased public employment and reduced private labor supply among beneficiaries. We also show that it improved local amenities in treated locations, for both beneficiary and non-beneficiaries. We then develop a spatial equilibrium model and leverage unique data on commuting flows to quantify the effect of exposure to changes in labor supply from treated locations on labor markets across the city. Our estimates imply that once fully rolled out the program increased private wages by 18.6%. Finally, we use the model to compute the welfare gains to the poor: when we include the indirect effects on private wages and local amenities the welfare gains are four times larger than the direct benefits from public employment alone.

JEL Classification: I38, J61, O18, R23

Suggested Citation

Abebe, Girum and Franklin, Simon and Imbert, Clément and Mejia-Mantilla, Carolina, Urban Public Works in Spatial Equilibrium: Experimental Evidence from Ethiopia (November 1, 2021). CEPR Discussion Paper No. DP16691, Available at SSRN: https://ssrn.com/abstract=3960295

Girum Abebe (Contact Author)

University of Westminster - Policy Studies Institute

Simon Franklin

Queen Mary University of London ( email )

Mile End Road
London, London E1 4NS
United Kingdom

Clément Imbert

University of Warwick ( email )

Gibbet Hill Rd.
Coventry, CV4 8UW
United Kingdom

Carolina Mejia-Mantilla

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

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