nep-ure New Economics Papers
on Urban and Real Estate Economics
Issue of 2012‒04‒17
23 papers chosen by
Steve Ross
University of Connecticut

  1. Is India’s Manufacturing Sector Moving Away From Cities? By Ejaz Ghani; Arti Grover Goswami; William R. Kerr
  2. A Regional Model of Endogenous Growth with Creative Destruction By Steven Bond-Smith
  3. Local average neighborhood effects from moving to opportunity By Dionissi Aliprantis; Francisca G.-C. Richter
  4. Compulsory Schooling Laws and In-School Crime: Are Delinquents Incapacitated? By Gregory A. Gilpin; Luke A. Pennig
  5. What price a roof? Housing and the cost of living in 16th-century Toledo By Drelichman, Mauricio; Gonzalez Agudo, David
  6. Well-Being in Germany: GDP and Unemployment Still Matter By Johannes Vatter
  7. Landfill Diversion in a Decentralized Setting: a Dynamic Assessment of Landfill Taxes By Massimiliano Mazzanti; Francesco Nicolli
  8. Taxing home ownership: distributional effects of including net imputed rent in taxable income By Francesco Figari; Alari Paulus; Holly Sutherland; Panos Tsakloglou; Gerlinde Verbist; Francesca Zantomio
  9. Early Childhood "Pay-For-Success" Social Impact Finance: A PKSE Bond Example to Increase School Readiness and Reduce Special Education Costs By Robert Dugger; Robert Litan
  10. Complex Methods in Economics: An Example of Behavioral Heterogeneity in House Prices By Bolt, W.; Demertzis, D.; Diks, C.G.H.; Van der Leij, M.J.
  11. Robust Test for Spatial Error Model:Considering Changes of Spatial Layouts and Distribution Misspecification By Guo, Penghui; Liu, Lihu
  12. Comparing Treatments across Labor Markets: An Assessment of Nonexperimental Multiple-Treatment Strategies By Carlos A. Flores; Oscar A. Mitnik
  13. Understanding Places Using a Mixed Method Approach By Deutsch, Kathleen E; Goulias, Konstadinos G.
  14. Hope VI Fairfield Court Neighborhood: 2011 Evaluation for the Stamford Housing Authority, aka Charter Oak Communities, Stamford, Connecticut By Jill Coghlan; Peter Gunther; Fred Carstensen; Michael Howser
  15. Azerbaijan Transport Sector 2011 By Irina Tochitskaya
  16. Teacher Preparation Programs and Teacher Quality: Are There Real Differences Across Programs? By Cory Koedel; Mark Ehlert; Michael Podgursky; Eric Parsons
  17. Transportation and Communication Infrastructure in Latin America: Lessons from Asia By Barbara Kotschwar
  18. The Role of Social Networks and Peer Effects in Education Transmission By Bervoets, Sebastian; Calvó-Armengol, Antoni; Zenou, Yves
  19. Understanding the long-run decline in interstate migration By Greg Kaplan; Sam Schulhofer-Wohl
  20. The industrial organization of competition in local bus services By Philippe Gagnepain; Marc Ivaldi; Catherine Vibes
  21. Productivity Growth and Job Creation in the Development Process of Industrial Clusters By Tetsushi Sonobe; Yuki Higuchi; Keijiro Otsuka
  22. Quitting and Peer Effects at Work By Julie Rosaz; Robert Slonim; Marie-Claire Villeval
  23. Infrastructure and Growth and Poverty in Bangladesh By Raihan, Selim

  1. By: Ejaz Ghani (World Bank); Arti Grover Goswami (World Bank); William R. Kerr (Harvard Business School, Entrepreneurial Management Unit)
    Abstract: This paper investigates the urbanization of the Indian manufacturing sector by combining enterprise data from formal and informal sectors. We find that plants in the formal sector are moving away from urban and into rural locations, while the informal sector is moving from rural to urban locations. While the secular trend for India's manufacturing urbanization has slowed down, the localized importance of education and infrastructure have not. Our results suggest that districts with better education and infrastructure have experienced a faster pace of urbanization, although higher urban-rural cost ratios cause movement out of urban areas. This process is associated with improvements in the spatial allocation of plants across urban and rural locations. Spatial location of plants has implications for policy on investments in education, infrastructure, and the livability of cities. The high share of urbanization occurring in the informal sector suggests that urbanization policies that contain inclusionary approaches may be more successful in promoting local development and managing its strains than those focused only on the formal sector.
    Keywords: Urbanization, structural transformation, transition, development, manufacturing, agglomeration, industrialization, growth, India.
    JEL: J61 L10 L60 O10 O14 O17 R11 R12 R13 R14 R23
    Date: 2012–04
  2. By: Steven Bond-Smith (University of Waikato)
    Abstract: We examine endogenous growth through vertical innovations in a two region model with partial regional and varietal knowledge spillovers. This paper extends the growth literature by adding a regional endogenous growth model with improvements in product quality, instead of a product variety engine for growth, where we account for partial knowledge spillovers in R&D. Starting with the quality ladders endogenous growth model we add traditional goods production by unskilled workers, location as a factor in R&D spillovers, migration of knowledge workers and vary the freeness of trade. Production of each manufactured variety is contestable through vertical innovation based on available knowledge and as a result, firms choose a location to maximise the productivity of R&D, maintain their niche monopoly and minimise transport costs. With contestability, knowledge spillovers provide for additional growth and the partial nature of spillovers causes an additional clustering effect encouraging agglomeration. Growth is highest when there is full agglomeration in one location, as knowledge spillovers are greater with manufacturing concentration. Agglomerated locations are reliant on local inter-varietal knowledge spillovers for growth while peripheral locations rely on trade and regional knowledge spillovers. In the long run, locations experience equal growth rates. If a location becomes agglomerated, it has higher long-run wages and higher growth rates during the transition to the long run. The model offers policy implications for lagging economies to improve inter-regional knowledge spillovers while agglomerated economies should be more concerned with business interaction within the region. Policies which reduce barriers to migration will increase long run growth rates by accelerating the transition to agglomeration.
    Keywords: endogenous growth; new economic geography; innovation; knowledge spillovers; agglomeration; quality ladders; creative destruction
    JEL: O41 R10
    Date: 2012–04–07
  3. By: Dionissi Aliprantis; Francisca G.-C. Richter
    Abstract: This paper estimates Local Average Treatment Effects (LATEs) of neighborhood quality from the Moving to Opportunity (MTO) housing mobility experiment in a generalized model with multiple treatment levels. We propose a new approach to identifying parameters that exploits the identification of unobservables in the multi-level model. The variation in neighborhood quality induced by MTO only allows us to identify LATEs of moving from the first to the second decile of the national distribution of quality, but in other applications the approach may allow for the estimation of Marginal Treatment Effects. Estimated LATEs on employment, labor force participation rates, earnings, income, welfare receipt, and body mass index are consistent with standard theories of neighborhood externalities.
    Keywords: Housing policy ; Econometric models ; Poverty
    Date: 2012
  4. By: Gregory A. Gilpin (Montana State University); Luke A. Pennig (Montana State University)
    Abstract: Minimum dropout age (MDA) laws have been touted as effective policies to bring dropouts off streets and into classrooms. One question to better understand the costs and benefits of these laws is: to what extent do MDA laws displace crime from streets to schools? This research expands the compulsory schooling literature and extends the sparse research on in-school crime by studying how MDA laws affect crimes committed in U.S. public high schools. The analysis is conducted using a difference-in-difference estimator exploiting variation in state-level MDA laws over time. The results indicate that an increase in the MDA to 18 significantly increases in-school crime by 0.434 incidences per 1,000 students or a 6.2% increase. Analyzing specific crime types, the results find that attacks without a weapon, threats without a weapon, and illegal drug incidences increase by 0.627, 0.588 and 0.437 incidences (or 12.2%, 36.3%, and 43.4% increase), respectively. An increase in the MDA to 17 is found to have no effect on in-school crime. The results are robust across different socioeconomic student bodies and control groups. Lastly, we find that in-school crime prevention resources do not increase with an increase in the MDA, but that utilization rates of suspensions and expulsions change in the direction of fortifying state policymakers efforts to keep juveniles in schools.
    Date: 2012–04
  5. By: Drelichman, Mauricio; Gonzalez Agudo, David
    Abstract: Data on housing costs and rental markets for the early modern period are notoriously scarce. We build a database of rent paid on 183 properties belonging to the Cathedral Chapter of Toledo between 1489 and 1600. Using detailed information on location, physical characteristics of the property, and the identity of the renter, we reconstruct housing costs for various social groups and trace the effect of exogenous shocks on the rental market. We then use our data to explore the impact of adding rent to early modern price indices and estimates of living standards. Price indices show a moderate effect. When comparing the living standards of Toledo to two northern European locations, the addition of rent reduces the gap between them by up to 9.5%.
    Keywords: housing, rent indices, living standards, early modern period, Spain
    Date: 2012–04–09
  6. By: Johannes Vatter
    Abstract: This paper examines regional differences in subjective well-being (SWB) in Germany. Inferential statistics indicate a diminishing but still significant gap between East and West Germany, but also differing levels of SWB within both parts. The observed regional pattern of life satisfaction reflects macroeconomic fundamentals, where labor market conditions play a dominant role. Differing levels of GDP and economic growth have contributed rather indirectly to regional well-being such that the years since the German reunification can be considered as a period of joyless growth. Approximately half of the "satisfaction gap" between East and West Germany can be attributed to differing macroeconomic conditions. Moreover, we argue that it is advisable for governments to collect more data on aspects that presumably influence the well-being of society. For example, it is highly probable that reliable data on regional income inequality would lead to severalimportant and influential studies. This, in turn, can help to design indicators for those characteristics which are known for affecting SWB. In total, we do not perceive any fundamental caveat for using data on SWB in order to measure welfare directly, at least within culturally and linguistically homogenous regions. To reduce statistical uncertainty, however, it would be helpful to include subjective information of this kind into larger cross-sectional surveys such as common census data.
    Keywords: social welfare, subjective well-being, unemployment, economic growth
    JEL: R10 I31
    Date: 2012
  7. By: Massimiliano Mazzanti; Francesco Nicolli
    Abstract: We analyse the process of landfill diversion and separated collection, two pillars of a waste related performance in a country, by embedding the dynamics in a frame where economic, geographical and policy variables enter the arena. We aim at investigating in depth what main drivers may be responsible for such a phenomenon. In addition to structural and economic drivers we primarily investigate the role of landfill taxes. Notwithstanding the Italian landfill tax dates back to 1996, there is a lack of effectiveness assessment, which primarily derives from the absence of a full coherent dataset covering all regions. In fact, the implementation is delegated to each region, a case study of real decentralisation, and the opposite for example of the UK situation, where the tax is set and administered by the Treasury. We first provide a descriptive analysis of the regional trends over the years on the basis of an original landfill tax dataset covering all Italy that we constructed through a scrutiny of regional bills, and web and telephone contacts. We exploit this peculiar and original aggregation of tax related information to test whether the tax has been effective in supporting landfill diversion. We test the hypothesis on the basis of an integrated dataset that merges economic, waste, policy variables together, at regional level and over the period 1999-2008. We check for results sensitivity the effect of the landfill regional tax by using provincial dataset over the same period. Panel regressions show that the effect of tax is significant, complementary to structural factors, population density and related opportunity cost among others. Spatial effects seem instead negligible. This is the first evidence on a large panel dataset that introducing and increasing landfill taxes over time is an effective way to cope with waste disposal. Regions that have increased such taxes over time have achieved better waste disposal performances. Landfill taxes are not the only instrument but they show to a relevant ‘must have’ in the policy package.
    Keywords: Landfill Taxes; Landfill Diversion; Recycling; Decentralized Policy; Regional Performance
    JEL: C23 Q38 Q56
    Date: 2012–04–10
  8. By: Francesco Figari (University of Essex & University of Insubria); Alari Paulus (University of Essex); Holly Sutherland (University of Essex); Panos Tsakloglou (Athens University of Economics and Business); Gerlinde Verbist (University of Antwerp); Francesca Zantomio (Ca� Foscari University of Venice)
    Abstract: Imputed rental income of homeowners is tax exempt in most countries, despite the long-standing arguments recommending its inclusion in the tax base, on both equity and efficiency grounds. The current fiscal crisis revived interest towards this form of taxation. The paper investigates the fiscal and distributional consequences of including homeowners� imputed rent, net of mortgage interest and maintenance costs, in taxable income as any cash income source that extends consumption opportunities. Three scenarios are analysed in six European countries: in the first imputed rent is included in the taxable income of homeowners, while at the same time existing mortgage interest tax relief schemes and taxation of cadastral incomes are abolished. In two further revenue-neutral scenarios, the additional tax revenue raised through the taxation of imputed rent is redistributed to taxpayers, either through a proportional rebate or a lump-sum tax credit. Results show how including net imputed rent in the tax base might affect inequality in each of the countries considered. Housing taxation appears to be a promising avenue for raising additional revenues, or lightening taxation of labour, with no inequality-increasing side-effects.
    Keywords: Housing taxation; imputed rent; income distribution; inequality; microsimulation
    JEL: D31 H23 I31 I32
    Date: 2012–04–08
  9. By: Robert Dugger (ReadyNation); Robert Litan (Kauffman Foundation)
    Abstract: Experts have long believed that the high economic returns on sound early childhood programs means it should be possible to pay for such programs with so-called "invest-in-kid bonds", a form of social impact finance that would pay income and repay invested capital from the proceeds of the economic gains from high-quality early childhood programs. The field of "pay for success" social impact finance has been evolving for over a decade, and transactions are taking many forms. This paper reviews the economic research, statutory and contractual, and community involvement standards that would need to be met in order to apply social impact finance in early childhood programs. Particular attention is given to implementation challenges in jurisdictionally and demographically complex urban regions. To aid understanding, a specific program concept is examined in detail. The paper presents an operational example of how social impact bonds might be used to pay for early learning to increase school readiness, paid for by lower public school special education costs. These pay for pre-k to reduce special-ed costs are called PKSE ("peek see") bonds.The example program is based on the 2009 Pennsylvania Pre-K Counts study of 10,000 children and uses data from the Bethlehem Area School District in PA's Lehigh Valley
    Date: 2012–03
  10. By: Bolt, W. (De Nederlandsche Bank); Demertzis, D. (De Nederlandsche Bank); Diks, C.G.H. (University of Amsterdam); Van der Leij, M.J. (University of Amsterdam)
    Abstract: We show how simple statistical techniques for capturing critical transitions used in natural sciences, fail to capture economic regime shifts. This implies that we need to use model-based approaches to identify critical transitions. We apply a heterogenous agents model in a standard housing market model to show that these family of models generate non-linear responses that can capture such transitions. We estimate this model for the United States and the Netherlands and find that first, the data does capture the heterogeneity in expectations and, second, that the qualitative predictions of such nonlinear models are very different to standard linear benchmarks. It would be important to identify which approach can serve best as an early warning indicator.
  11. By: Guo, Penghui; Liu, Lihu
    Abstract: This paper suggests a robust LM (Lagrange Multiplier) test for spatial error model which not only reduces the influence of spatial lag dependence immensely, but also presents robust to changes of spatial layouts and distribution misspecification. Monte Carlo simulation results imply that existing LM tests have serious size and power distortion with the presence of spatial lag dependence, group interaction or non-normal distribution, but the robust LM test of this paper shows well performance.
    Keywords: LM test; Spatial Layouts; Distribution Misspecification; Robustness
    JEL: C1
    Date: 2011–11
  12. By: Carlos A. Flores (Department of Economics, University of Miami); Oscar A. Mitnik (Department of Economics, University of Miami)
    Abstract: We consider the problem of using data from several programs, each implemented at a different location, to compare what their effect would be if they were implemented at a specific location. In particular, we study the effectiveness of nonexperimental strategies in adjusting for differences across comparison groups arising from two sources. First, we adjust for differences in the distribution of individual characteristics simultaneously across all locations by using unconfoundedness-based and conditional difference-in-difference methods for multiple treatments. Second, we explicitly adjust for differences in local economic conditions. We stress the importance of analyzing the overlap of, and adjusting for, local economic conditions after program participation. Our results suggest that the strategies studied are valuable econometric tools for the problem we consider, as long as we adjust for a rich set of individual characteristics and have sufficient overlap across locations for both individual and local labor market characteristics. Our results show that the overlap analysis of these two sets of variables is critical for identifying non-comparable groups and they illustrate the difficulty of adjusting for local economic conditions that differ greatly across locations.
    Keywords: Multiple treatments; Generalized propensity score; Local economic conditions
    JEL: C21 C31 I38
    Date: 2011
  13. By: Deutsch, Kathleen E; Goulias, Konstadinos G.
    Abstract: With the increased application of the activity based approach comes the inherent need to incorporate more detail regarding behavior. This need for detail has in turn created a need for both a deeper understanding and theoretical basis for behavior, and the incorporation of data collection and analysis methods to handle more behavioral detail. Because of this, the use of qualitative and mixed method approaches in travel behavior has received increased attention over the last few decades. In this paper, quantitative and qualitative methodologies are discussed and applied to data collected in Santa Barbara, California, measuring peoples’ attitudes about places (sense of place). Both quantitative and qualitative methods are applied using first a factor analysis and complementing this with a qualitative analysis of text from an open-ended question. The findings of these analyses are compared and incorporated to contribute to a greater understanding of both sense of place and behavior. Theoretical developments and implications for future research are discussed in light of analysis findings.
    Keywords: Urban Studies and Planning
    Date: 2011–09–01
  14. By: Jill Coghlan; Peter Gunther; Fred Carstensen; Michael Howser
    Abstract: During the ten-year period that occurs between available Census data for the Fairfield Court HUD project baseline (1999) and data in this report (2009), the nation in general, and Stamford in particular, experienced a strong housing bubble, evidenced by new construction and strong increases in market value and assessed value, even in the less well-to-do HOPE VI neighborhood. In this decade when all areas developed into more diverse communities, HOPE VI residents in the eastern-most Tract 215 experienced upward movement in their Median Income, even though poverty also increased by 1% in the decade. Residents on the western side of Stamford, median income declined by 25% although poverty also declined.
    Keywords: HUD; neighborhood evaluation.
    JEL: I3 R3
    Date: 2011–04
  15. By: Irina Tochitskaya
    Abstract: The report evaluates progress achieved in implementation of structural reforms of the transport sector in Azerbaijan in the following subsectors: railways, road transport and roads, air transport and airports, maritime transport and ports. It presents standardized and qualitative indicators that assess the level of the transport sector reforms in three areas: 1) commercialization and privatization, 2) tariff policy, and 3) institutional and regulatory changes. The aggregated index is calculated on the basis of the 21 indicators that reflects the status of the reforms in each sector at a period under review.
    Keywords: Transportation analysis, Transition economies, Reform
    JEL: L91 L92 L93 R4 O18 P21
    Date: 2012
  16. By: Cory Koedel (Department of Economics, University of Missouri-Columbia); Mark Ehlert (Department of Economics, University of Missouri-Columbia); Michael Podgursky (Department of Economics, University of Missouri-Columbia); Eric Parsons (Department of Economics, University of Missouri-Columbia)
    Abstract: We compare teacher preparation programs in Missouri based on the effectiveness of their graduates in the classroom. The differences in effectiveness between teachers from different preparation programs are very small. In fact, virtually all of the variation in teacher effectiveness comes from within-program differences between teachers. Prior research has overstated differences in teacher performance across preparation programs for several reasons, most notably because some sampling variability in the data has been incorrectly attributed to the preparation programs.
    Keywords: Teacher Training, Value Added, Data Clustering, Teacher Preparation, Teacher Preparation Program Effectiveness
    JEL: I20
    Date: 2012–04–09
  17. By: Barbara Kotschwar (Peterson Institute for International Economics)
    Abstract: In Latin America, inadequate transportation infrastructure has been identified as an increasingly important impediment to the region's further integration in global trade and a significant factor preventing countries from properly taking advantage of the multitude of regional, plurilateral, and bilateral trade agreements signed in the past decade and a half. This paper examines transport and communications infrastructure initiatives in Latin American and Asian regional trade arrangements and finds several lessons Asia can teach Latin America.
    Keywords: trade, infrastructure, regional trade agreements (RTAs), transport costs, transport infrastructure, cooperation, East Asia, Latin America
    JEL: F10 F15 R11 R42 R58
    Date: 2012–04
  18. By: Bervoets, Sebastian; Calvó-Armengol, Antoni; Zenou, Yves
    Abstract: We propose a dynastic model in which individuals are born in an educated or uneducated environment that they inherit from their parents. We study the role of social networks on the correlation in the parent-child educational status independent of any parent-child interaction. We show that the network reduces the intergenerational correlation, promotes social mobility and increases the average education level in the population. We also show that a planner that encourages social mobility also reduces social welfare, hence facing a trade off between these two objectives. When individuals choose the optimal level of social mobility, those born in an uneducated environment always want to leave their environment while the reverse occurs for individuals born in an educated environment.
    Keywords: education; intergenerational correlation; Social mobility; strong and weak ties
    JEL: I24 J13 Z13
    Date: 2012–04
  19. By: Greg Kaplan; Sam Schulhofer-Wohl
    Abstract: We analyze the secular decline in interstate migration in the United States between 1991 and 2011. Gross flows of people across states are about 10 times larger than net flows, yet have declined by around 50 percent over the past 20 years. We show that micro data rule out many popular explanations for this decline, including aging of the population, the rise of two-earner households, other compositional changes, regional changes, and the rise in real incomes. We argue instead that the fall in migration is due to a decline in the geographic specificity of occupations and an increase in workers’ ability to learn about other locations before moving there, through both information technology and inexpensive travel. We develop a theory to formalize these ideas and show that a plausibly calibrated version is consistent with cross-sectional and time-series patterns of interstate migration, occupations, and incomes.
    Date: 2012
  20. By: Philippe Gagnepain (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Paris I - Panthéon Sorbonne, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris); Marc Ivaldi (TSE - Toulouse School of Economics - Toulouse School of Economics); Catherine Vibes (TSE - Toulouse School of Economics - Toulouse School of Economics)
    Abstract: This article is aimed at deepening our understanding of the functioning of competition in the local bus transportation industry and to evaluate its effectiveness. It provides an overview of the competitive constraints that are at work in the industry as discussed in the economic literature, and sketches empirical tests to check whether the intuitions provided by the economists are in line with the reality of the industry.
    Date: 2011
  21. By: Tetsushi Sonobe (National Graduate Institute for Policy Studies); Yuki Higuchi (National Graduate Institute for Policy Studies); Keijiro Otsuka (National Graduate Institute for Policy Studies)
    Abstract: Poor management has long been suspected as a major constraint on job creation in the manufacturing sector in low-income countries. In this sector, numerous micro and small enterprises in industrial clusters account for a large share of employment. This paper examines the roles of industrial clusters and entrepreneurship in improving productivity and creating jobs, by reviewing the literature and case studies, including recent experiments. We find that the managerial capacity of entrepreneurs largely determine firms’ employment sizes, that their innovative capacity is a major determinant of productivity growth, and that entrepreneurship consisting of these capacities boosts cluster-based industrial development.
    Keywords: job creation, labor productivity, industrial cluster, management, entrepreneurship
    Date: 2012–03
  22. By: Julie Rosaz (LAMETA - Laboratoire Montpellierain d'économie théorique et appliquée - CNRS : UMR5474 - INRA : UR1135 - CIHEAM - Université Montpellier I - Montpellier SupAgro); Robert Slonim (University of Sydney, School of economics - University of Sydney); Marie-Claire Villeval (GATE Lyon Saint-Etienne - Groupe d'analyse et de théorie économique - CNRS : UMR5824 - Université Lumière - Lyon II - École Normale Supérieure - Lyon)
    Abstract: While peer effects have been shown to affect worker's productivity when workers are paid a fixed wage, there is little evidence on their influence on quitting decisions. This paper presents results from an experiment in which participants receive a piece-rate wage to perform a real-effort task. After completing a compulsory work period, the participants have the option at any time to continue working or quit. To study peer effects, we randomly assign participants to work alone or have one other worker in the room with them. When a peer is present, we manipulate the environment by giving either vague or precise feedback on the co-worker's output, and also vary whether the two workers can communicate. We find that allowing individuals to work with a co-worker present does not increase worker's productivity. However, the presence of a peer in all working conditions causes workers to quit at more similar times. When, and only when, communication is allowed, workers are significantly more likely to (1) stay longer if their partner is still working, and (2) work longer the more productive they are. We conclude that when workers receive a piece-rate wage, critical peer effects occur only when workers can communicate with each other.
    Keywords: Quits; peer effects; communication; feedback; experiment
    Date: 2012–04–03
  23. By: Raihan, Selim
    Abstract: This paper has explored the relationship between infrastructure and growth and poverty in the context of the Bangladesh economy and in this context the paper has used three different techniques. The general conclusion is that infrastructure plays extremely significant role in promoting growth and alleviating poverty in Bangladesh. The construction of the district-wise Infrastructure Development Index (IDI) and ranking of the districts on IDI suggest that the districts which are close to the capital city are having higher IDIs than the districts which are far from the capital city. The cross-section regression results suggest that the district-wise variation in head-count poverty is well explained by the variation in the IDI and the district with higher IDIs are associated with lower head-count poverty. The SAM multiplier model indicates significant rise in gross output, household consumption and value-addition because investment in physical and social infrastructure. A 20 percent increase in infrastructural investment demand would lead to 8.17 percent rise in gross output, 8.07 percent rise in value-added or gross domestic product, and 7.12 percent rise in household consumption. The exercise using the CGE model suggests that 25 percent reduction in the transport margin in the sectors would lead to rise in the real GDP by 0.57 percent, fall in the general price index by 1.43 percent, rise in exports and imports by 0.83 and 0.95 percent, and rise in national welfare by 0.39 percent. Also, the national head-count poverty would fall by 1.24 percent. The poorer household groups are likely to experience higher reduction in poverty indices compared to their non-poor
    Keywords: Infrastructure; Growth; Poverty; Bangladesh; CGE
    JEL: C68 C02 C01
    Date: 2011–05

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