Roads and the Geography of Economic Activities in Mexico

Theophile Bougna (The World Bank - IBRD - IDA)

September 14, 2017, 11:00–12:30


Room MF 323

Development, Labor and Public Policy Seminar


This paper estimates the impacts of road improvements on local employment structure and specialization in Mexico over the period 1985-2016. Using geo-referenced panel data, it measures access to domestic markets for each locality and time as a weighted sum of surrounding populations (market access) or incomes (market potential), with weights inversely related to travel time or travel cost to surrounding areas. Instrumenting for road placement endogeneity and addressing the recursion problem inherent in market access regressions, the analysis finds significant and positive causal effects of improved accessibility on employment and specialization. Heterogeneous effects are found across sectors and regions.