11th Apr 2019, Working Paper
Roads are essential to facilitate interactions in cities. A sub-optimal road layout in cities and towns may inhibit interactions and constrain urban population growth. Using data from over 1800 cities and towns from Sub-Saharan Africa, and an instrument based on the history of foundation ages of cities in Africa, we study the relationship between the road layout of a city and its population growth. We show that cities characterised by low road density in the city centre experience less population growth in recent decades.
7th Mar 2019, Submitted Paper
Land rights and tenure systems are an important factor behind poor housing and inefficient land-use in developing country cities. In Kampala, Uganda, four systems of land tenure coexist, allowing a detailed study of the effects of these on household and firm location decisions. Spatially disaggregated data across the city suggest that the presence of a traditional land tenure system (called mailo) skews land-use towards informal housing and away from productive activities. Using a structural model of the city we show that this due to mailo having a positive value for occupants of informal housing, attributable to mailo-specific amenity benefits and/ or rent caps. We use the model to investigate the effect of converting all mailo land in the city to leasehold. Despite direct loss of amenity experienced by mailo residents, aggregate city income may rise substantially because of more efficient land-use. Manufacturing firms move into formerly mailo areas and form new clusters of activity. This increases urban wages, particularly among the low skilled, and raises aggregate urban real incomes by 2% in the absence of localisation economies and as much as 6.7% in the presence of such economies of scale.
1st Mar 2019, Working Paper
As one of world’s fastest growing cities, Dhaka faces acute challenges in housing its growing population and developing a more productive economy. Central to this is the scarcity of high-quality urban land. Yet a vast tract of land near the heart of the city, East Dhaka, currently remains predominantly agricultural and undeveloped as a consequence of flooding. This paper uses a computable spatial general equilibrium model that captures the economic geography of the city, to estimate the economic returns of coordinated action to develop this land. The model captures different productive sectors, household skill levels, and types of housing. Firms and residents choose their location within the city given the transport network and land availability, generating a pattern of commercial and residential land-use. The paper estimates the incremental impacts on income, employment and population of an embankment and other flood protection measures to protect this land, as well as from improvement in transport infrastructure and targeted support for economic development in East Dhaka.
2nd Jan 2019, Working Paper
Author: Simon Franklin
Can the state improve the lives of slum dwellers by supplying formal housing otherwise not provided by the market? Or will state-built housing, priced at the cost of production, be beyond the willingness to pay of poor households or built in the wrong location? To answer these questions, I study a lottery for large-scale government housing in Ethiopia. Winners of the lottery are sold apartments on the outskirts of the city. They then have the choice to move in or rent out these units. By moving in, they pay a high implicit price in forgone rent determined by the market, which I show to exceed the cost to the state of producing the housing. I find that nearly half of lottery winners trade slum housing in the city centre for improved housing on the outskirts of cities. In addition, they make upgrades to their apartments, adding a number of amenities that they did not enjoy in their slum housing. I argue that this reveals unmet demand for improved housing and suggests that informal housing is a sub-optimal outcome for a large proportion of slum-dwellers in this setting. Moving to sites far from the city centre does not negatively affect labour supply or earnings. Although social lives are less vibrant in the new housing estates, lottery winners report significant reductions in conflict with neighbours and increased willingness to contribute to public goods.
1st Sep 2018, Working Paper
At the heart of urban economics are agglomeration economies, which drive the existence and extent of cities and are also central to structural transformation and the urbanization process. This paper evaluates the use of different measures of economic density in assessing urban agglomeration effects, by examining how well they explain household income differences across cities and neighborhoods in six African countries. We examine simple scale and density measures and more nuanced ones which capture in second moments the extent of clustering within cities. The evidence suggests that more nuanced measures attempting to capture within-city differences in the extent of clustering do no better than a simple density measure in explaining income differences across cities, at least for the current degree of accuracy in measuring clustering. However, simple city scale measures such as total population are inferior to density measures and to some degree misleading. We find large household income premiums from being in bigger and particularly denser cities over rural areas in Africa, indicating that migration pull forces remain very strong in the structural transformation process. Moreover, the marginal effects of increases in urban density on household income are very large, with density elasticities of 0.6. In addition to strong city level density effects, we find strong neighbourhood effects. For household incomes, both overall city density and density of the own neighborhood matter.
1st Sep 2018, Published Paper
Author: Simon Franklin
Do high search costs affect the labour market outcomes of job seekers living far away from jobs? I randomly assign transport subsidies to unemployed youth in urban Ethiopia. Treated respondents increase job search intensity, and are more likely to find good, permanent, jobs. Subsidies also induce a short-term reduction in temporary work. I use a high-frequency phone call survey to track the trajectory of search behaviour over time to show that the subsidies significantly increased job search intensity, and the use of formal search methods. The evidence suggests that cash constraints cause young people to give up looking for good jobs too early.
Economic Journal, 2018.
19th Aug 2018, Submitted Paper
We show that helping young job-seekers to signal their skills to employers can generate large and persistent improvements in labour market outcomes. We do this by comparing an intervention that improves the ability to signal skills (the ‘job application workshop’) to a transport subsidy treatment designed to reduce the cost of job search. We find that in the short-run both interventions have large positive effects on the probability of finding formal jobs. The workshop also increases the probability of having a stable job with an open-ended contract. Four years later, the workshop significantly increases earnings, job satisfaction and employment duration, while the effects of the transport subsidy have dissipated. These gains are concentrated among groups who generally have worse labour market outcomes. Overall, our findings highlight that young people possess valuable skills that are unobservable to employers. Making these skills observable generates earning gains that are far greater than the cost of the intervention.
Revise and Resubmit, Review of Economic Studies
21st Mar 2018, Submitted Paper
Does economic activity relocate away from areas that are at high risk of recurring shocks? We examine this question in the context of floods, which are among the costliest and most common natural disasters. Over the past thirty years, floods worldwide killed more than 500,000 people and displaced over 650,000,000 people. This paper analyzes the effect of large scale floods, which displaced at least 100,000 people each, in over 1,800 cities in 40 countries, from 2003-2008. We conduct our analysis using spatially detailed inundation maps and night lights data spanning the globe's urban areas, which we use to measure local economic activity. We find that low elevation areas are about 3-4 times more likely to be hit by large floods than other areas, and yet they concentrate more economic activity per square kilometer. When cities are hit by large floods, these low elevation areas also sustain damage, but like the rest of the flooded cities they recover rapidly, and economic activity does not move to safer areas. Only in more recently populated urban areas, flooded areas show a larger and more persistent decline in economic activity. Our findings have important policy implications for aid, development and urban planning in a world with rapid urbanization and rising sea levels.
Forthcoming, American Economic Journal: Applied Economics
16th Feb 2018, Submitted Paper
Africa’s demand for urban housing is soaring, even as it faces a proliferation of slums. In this setting, can modest infrastructure investments in greenfield areas where people subsequently build their own homes lead to better quality neighborhoods in the long run? We study "Sites and Services" projects implemented in seven Tanzanian cities during the 1970s and 1980s, and we compare greenfield areas that received basic infrastructure investment (de novo areas) to geographically proximate greenfield areas that did not (control areas). Using satellite images, surveys, and census data from the 2010s, we find that de novo areas developed into neighborhoods with much better housing quality. Specifically, de novo neighborhoods are more orderly and their buildings have larger footprint areas and are more likely to have multiple stories and better amenities, due not only to the persistence of initial investments but also to private complementary investments. We also document the role of sorting of owners and residents, which only partly accounts for the differences in housing quality across neighborhoods. Finally, we study initially squatted areas that were also upgraded as part of “Sites and Services”, and our descriptive evidence suggests that they are now if anything worse than the control areas. We conclude that preemptive infrastructure investments can lead to neighborhoods with significantly better housing in the long run.
Reject and Resubmit, Journal of Political Economy
1st Feb 2018, Submitted Paper
Author: Simon Franklin
Do informal housing conditions constrain labour supply? I estimate the effect of receiving a free formal house, under South African government’s housing program, which has given away over 3 million housing units in the last 24 years. Using four waves of household panel data from Cape Town and geographical data on the location of large housing projects, I exploit a natural experiment whereby households living close to projects were first in line to get them to instrument for selection into the programme. I use projects that were planned and approved, but never actually built, to deal with non-random placement of housing projects. Housing has a significant positive effect on household earned income. This effect is driven by increased employment rates among female members of these households. I present suggestive evidence that formal housing alleviates the demands of work at home for women, which leads to increases in labour supply to wage paying jobs.
Revise and Resubmit, Journal of Urban Economics