The New Palgrave Dictionary of Economics

Living Edition
| Editors: Palgrave Macmillan

Infrastructure and Inequality

  • César Calderón
  • Luis Servén
Living reference work entry


An adequate supply of infrastructure services has long been considered essential for economic development by both academics and policymakers. This article reviews recent theoretical and empirical literature on the effects of infrastructure development on income distribution. The theoretical literature has employed a variety of analytical settings regarding the dynamics of income distribution, the extent of market distortions – notably in capital markets – and the externalities surrounding infrastructure services. In turn, the empirical literature has tested for the distributive effects of infrastructure development using multiple approaches, from cross-country aggregate data to micro-level studies of specific infrastructure interventions. However, these empirical tests face challenging issues of measurement, identification and heterogeneity. Overall, the empirical evidence suggests that infrastructure development may have a positive effect on distributive equity. Still, little is known about the likely magnitude of such an effect and the precise mechanisms through which it may accrue.


Inequality Infrastructure Poverty Public investment 

JEL Classifications

D31 H54 
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We thank Jon Temple for useful comments and suggestions. The views expressed here are ours only and do not necessarily reflect those of the World Bank, its Executive Directors, or the countries they represent.


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© The Author(s) 2014

Authors and Affiliations

  • César Calderón
    • 1
  • Luis Servén
    • 1
  1. 1.