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Title: To What Extent Can Long-Term Investments in Infrastructure Reduce Inequality?

Citation Type: Miscellaneous

Publication Year: 2017

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Abstract: By reviewing US state-level panel data on infrastructure spending and on per capita income inequality over a 60-year period from 1950 to 2010, this paper sets out to test whether there is an empirical link between infrastructure and inequality. Our main results, obtained from panel regressions with both state and time fixed effects, show that highways and higher education spending growth in a given decade correlates negatively with Gini indices at the end of the decade, suggesting a causal effect from growth in infrastructure spending to a reduction in inequality. More importantly, this relationship is stronger with inequality at the bottom 40 per cent of the income distribution. In addition, infrastructure expenditures on highways are shown to be more effective at reducing inequality. A counterfactual experiment reveals which US states ended up with a significantly higher bottom Gini coefficient in 2010 due to underinvestment in infrastructure over the first decade of the 21st century. A second related goal of this paper, from a policy making perspective, is to highlight innovations in finance for infrastructure investments, for the US, other industrially advanced countries and also for developing economies

Url: http://ccsi.columbia.edu/files/2017/03/Infrastructure-and-inequality_2mar17.pdf

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Authors: Hooper, Emma; Peters, Sanjay; Pintus, Patrick A

Publisher: Aix-Marseille University

Data Collections: IPUMS USA

Topics: Education, Land Use/Urban Organization, Other

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