What happens when you build a road to a rural village?

Evidence from Sierra Leone:

We show that the improved roads reduced market prices of local crops. These price effects are stronger in markets that are further from major urban centers and in less productive areas. In addition, these price effects are reversed in areas with better cell phone penetration.

One of the interesting papers at Growth Week from Casaburi, Glennerster and Suri.

My first thought was “Maybe real incomes rose, since few people sell crops, but everyone buys goods from the city, which are now cheaper”. They agreed but are looking mainly at producers.

Consequently, my second thought was “Woo hoo!” because that’s what I was hoping to write about in northern Uganda.

When you’re an academic, complementary papers are so much more comforting than substitutes.


2 thoughts on “What happens when you build a road to a rural village?

  1. What’s the tl;dr on farmers incomes? The price they can demand for the crop may go down, but their profits might go up (reduced costs), and they may sell more. Why is price per unit crop the qty of interest here?