Household Welfare Effects of Street Paving in Mexico

Given that the administration could afford to pay for only 28 of the 56 paving projects, we assigned 28 streets to intent to treatment and 28 to control using simple randomization by means of a random number generator function in MS Excel. The intervention consisted of the first-time asphalting of residential non-arterial streets, varying in width from 8-15 meters, and allowing for two lanes of vehicle traffic and one or two lanes for parking. Data was collected via a household survey, before and after the project, as well as professional appraisals of residential-property values in 2006 and 2009. The target population of the survey consisted of all occupied residential structures on the streets that were selected for the experiment, including 1,231 households in 2006 and 1,083 households in 2009.

2007-01-01

2009-03-31

Impacts on Consumption and Credit, Impacts on Transportation and Labor Market Outcomes, Impacts on Property Values, Impacts on Satisfaction with the Government

The municipality did not publicly announce the list of experimental street projects, thus participation in the program was revealed to neighbors with the arrival of measurement teams, construction crews, and machinery. This eliminated potential biases at baseline from households anticipating rising housing values due to the project.

Assigned half to intent to treatment and half to control using simple randomization by means of a random number generator function in MS Excel.

Street projects each defined by the city as a set of unpaved streets connecting at least once to the paved street network at baseline.

Yes

56 street pavement project clusters

The baseline survey in 2006 was administered to 1,231 households living in 1,193 dwellings, with a response rate of 94%. In 2009, 1,083 households were interviewed. In 900 cases we found the same household that we had interviewed in 2006, and in 156 cases we found that a new household was in residence. All families living in residences built between baseline and follow-up were also interviewed (N = 27).

28 streets to assigned to intent to treat and 28 assigned to control.

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 by 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.

Paving Streets for the Poor: Experimental Analysis of Infrastructure Effects Marco Gonzalez-Navarro and Climent Quintana-Domeque Review of Economics and Statistics 2016 Vol. 98, Num. 2, pp. 254-267 .

http://www.mitpressjournals.org/doi/abs/10.1162/REST_a_00553#.Vw6zllUrKUk

ONLINE APPENDIX (Supplementary Material)

The Review of Economics and Statistics, May 2016, 98(2): 254–267
© 2016 by the President and Fellows of Harvard College and the Massachusetts Institute of Technology doi:10.1162/REST_a_00553

http://www.mitpressjournals.org/doi/suppl/10.1162/REST_a_00553/suppl_file/REST_a_00553-esupp.pdf