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The social profitability of rural roads in a small open economy: Do urban agglomeration economies matter?

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Abstract

In the presence of agglomeration economies, the effects of a rural roads programme depend not only on the reduction in transportation costs, but also on the form of labour mobility. When financed by a poll tax on rural households, the wage will rise, accompanied by some return migration, provided both cross-price effects in production and consumption and agglomeration economies are sufficiently small. With empirically plausible elasticities of agglomeration economies, urban households may be worse off.

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  • Clive Bell, 2020. "The social profitability of rural roads in a small open economy: Do urban agglomeration economies matter?," WIDER Working Paper Series wp-2020-137, World Institute for Development Economic Research (UNU-WIDER).
    • Handle: RePEc:unu:wpaper:wp-2020-137
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    Keywords

    Rural roads; Profitability; Transportation; Agglomeration;
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