Roads, Competition, and the Informal SectorMarco Sanfilippo (Associate Professor, University of Turin and Collegio Carlo Alberto), Elena Perra (Department of Economics, University of Florence), Asha Sundaram (Department of Economics, University of Auckland)Presenter:Wednesday, April 12, 202310:00 ¨C 11:00 AM (EST)HYBRID SEMINAR: and Room F-4K-E-400 | |
AbstractWe examine the impact of competition from better connectivity to domestic markets on formal and informal firms. Combining geolocalized information on road improvements under a large infrastructure investment program with data on manufacturing firms in Ethiopia, we show that an increase in competition is associated with higher labor productivity, capital-intensity, investment in physical capital and wages in the formal sector. On the contrary, there is no associated increase in labor productivity or wages in the informal sector. In fact, increased competition results in lower capital-intensity and investment, a shift in composition towards workers without primary education and a lower likelihood of operating in the informal sector. We thus highlight that the benefits of infrastructure improvement programs may not accrue uniformly in the economy. | |
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