Skip to main content
SpringerLink
Log in

Infrastructure and Inequality

  • Living reference work entry
  • First Online:
The New Palgrave Dictionary of Economics

Abstract

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.

This chapter was originally published in The New Palgrave Dictionary of Economics, Online edition, 2014. Edited by Palgrave Macmillan.

This is a preview of subscription content, log in via an institution to check access.

Access this chapter

Log in via an institution

Institutional subscriptions

Bibliography

  • Aghion, P., and P. Bolton. 1992. Distribution and growth in models of imperfect capital markets. European Economic Review 36: 603–611.

    Article  Google Scholar 

  • Aghion, P., and P. Bolton. 1997. A theory of trickle-down growth and development. Review of Economic Studies 64(2): 151–172.

    Article  Google Scholar 

  • Alesina, A., R. Baqir, and W. Easterly. 1999. Public goods and ethnic divisions. Quarterly Journal of Economics 114(4): 1243–1284.

    Article  Google Scholar 

  • Andrés, L. A., B. Briceño, C. Chase, and J. A. Echenique. 2014. Sanitation and externalities: Evidence from early childhood health in rural India. World bank policy research working paper 6737.

    Google Scholar 

  • Banerjee, A.V., and A.F. Newman. 1993. Occupational choice and the process of development. Journal of Political Economy 101(2): 274–298.

    Article  Google Scholar 

  • Benitez, D., O. Chisari, and A. Estache. 2003. Can the gains from Argentina’s utilities reform offset credit shocks? In Utility privatization and regulation: A fair deal for consumers? ed. C. Ugaz and C. Waddams Price. Northampton: Edward Elgar.

    Google Scholar 

  • Brenneman, A., and M. Kerf. 2002. Infrastructure and poverty linkages: A literature review (manuscript). Washington, DC: World Bank.

    Google Scholar 

  • Calderón, C., and A. Chong. 2004. Volume and quality of infrastructure and the distribution of income: An empirical investigation. Review of Income and Wealth 50: 87–105.

    Article  Google Scholar 

  • Calderón, C., and L. Servén. 2004. The effects of infrastructure development on growth and income distribution. World bank policy research working paper 3400.

    Google Scholar 

  • Calderón, C., and L. Servén. 2010a. Infrastructure and economic development in Sub-Saharan Africa. Journal of African Economies 19(S1): 13–87.

    Article  Google Scholar 

  • Calderón, C., and L. Servén. 2010b. Infrastructure in Latin America. In The oxford handbook of latin American economies, ed. J. Ocampo and J. Ros. Oxford: Oxford University Press.

    Google Scholar 

  • Capuno, J., C.A.R. Tan, and V.M. Fabella. 2011. Do piped water and flush toilets prevent child diarrhea in rural Philippines? Asia-Pacific Journal of Public Health 27: NP2122–NP2132. doi:10.1177/1010539511430996.

    Article  Google Scholar 

  • Chatterjee, S., and S.J. Turnovsky. 2012. Infrastructure and inequality. European Economic Review 56: 1730–1745.

    Article  Google Scholar 

  • Chisari, O., A. Estache, and C. Romero. 1999. Winners and losers from privatization and regulation of utilities: Lessons from a general equilibrium model of Argentina. World Bank Economic Review 13(2): 357–378.

    Article  Google Scholar 

  • Devoto, F., E. Duflo, P. Dupas, W. Parienté, and V. Pons. 2011. Happiness on tap: Piped water adoption in urban Morocco (manuscript). Cambridge, MA: MIT.

    Book  Google Scholar 

  • Dinkelman, T. 2011. The effects of rural electrification on employment: New evidence from South Africa. American Economic Review 101: 3078–3108.

    Article  Google Scholar 

  • Duflo, E., and R. Pande. 2007. Dams. Quarterly Journal of Economics 122(2): 601–646.

    Article  Google Scholar 

  • Escobal, J., and C. Ponce. 2008. Enhancing income opportunities for the rural poor: The benefits of rural roads. In Economic reform in developing countries: Reach, range, reason, ed. J.M. Fanelli and L. Squire, 307–336. New Delhi: Edward Elgar.

    Google Scholar 

  • Estache, A., A. Gomez-Lobo, and D. Leipziger. 2000. Utility privatization and the needs of the poor in Latin America: Have we learned enough to get it right? World bank policy research working paper 2407.

    Google Scholar 

  • Estache, A., V. Foster, and Q. Wodon. 2002. Accounting for poverty in infrastructure reform: Learning from Latin America’s experience, WBI development studies. Washington, DC: World Bank.

    Book  Google Scholar 

  • Fan, S., and X. Zhang. 2004. Infrastructure and regional economic development in rural China. China Economic Review 15: 203–214.

    Article  Google Scholar 

  • Ferreira, F. H. G. 1995. Roads to equality: wealth distribution dynamics with publicprivate capital complementarity. LSE-STICERD Discussion Paper TE/95/286 (London).

    Google Scholar 

  • Foster, V., J.P. Tre, and Q. Wodon. 2001. Energy prices, energy efficiency, and fuel poverty (manuscript). Washington, DC: World Bank.

    Google Scholar 

  • Galiani, S., P. Gertler, and E. Schargrodsky. 2005. Water for life: the impact of the privatization of water services on child mortality. Journal of Political Economy 113(1): 83–120.

    Article  Google Scholar 

  • Galor, O., and J. Zeira. 1993. Income distribution and macroeconomics. Review of Economic Studies 60: 35–52.

    Article  Google Scholar 

  • Getachew, Y.Y. 2010. Public capital and distributional dynamics in a two-sector growth model. Journal of Macroeconomics 32: 606–616.

    Article  Google Scholar 

  • Hulten, C. 1996. Infrastructure capital and economic growth: How well you use it may be more important than how much you have. NBER working paper 5847.

    Google Scholar 

  • Jalan, J., and M. Ravallion. 2003. Does piped water reduce diarrhea for children in rural India? Journal of Econometrics 112: 153–173.

    Article  Google Scholar 

  • Khandker, S.R., and G.B. Koolwal. 2007. Are pro-growth policies pro-poor? Evidence from Bangladesh (manuscript). Washington, DC: World Bank.

    Google Scholar 

  • Khandker, S.R., and G.B. Koolwal. 2010. How infrastructure and financial institutions affect rural income and poverty: Evidence from Bangladesh. Journal of Development Studies 46(6): 1109–1137.

    Article  Google Scholar 

  • Leipziger, D., M. Fay, and T. Yepes. 2003. The importance of infrastructure in meeting MDGs (manuscript). Washington, DC: World Bank.

    Google Scholar 

  • Lokshin, M., and R. Yemtsov. 2005. Has rural infrastructure rehabilitation in Georgia helped the poor? World Bank Economic Review 19(2): 311–333.

    Article  Google Scholar 

  • López, H. 2004. Macroeconomics and inequality. World bank research workshop, macroeconomic challenges in low income countries.

    Google Scholar 

  • Majumder, R. 2012. Removing poverty and inequality in India: The role of infrastructure. MPRA paper no. 40941, Department of Economics, University of Burdwan.

    Google Scholar 

  • Mu, R., and D. van de Walle. 2007. Rural roads and local market development in Vietnam. World bank policy research working paper 4340.

    Google Scholar 

  • Navajas, F. H. 2000. El impacto distributivo de los cambios en los precios relativos en la Argentina entre 1988–1998 y los efectos de las privatizaciones y la desregulación económica. In: La Distribución del Ingreso en Argentina, ed. Fundación de Investigaciones Económicas Latinoamericanas. Buenos Aires.

    Google Scholar 

  • Pi, J., and Y. Zhou. 2012. Public infrastructure provision and skilled–unskilled wage inequality in developing countries. Labour Economics 19(6): 881–887.

    Article  Google Scholar 

  • Piketty, T. 1997. The dynamics of the wealth distribution and the interest rate with credit-rationing. Review of Economic Studies 64(2): 173–189.

    Article  Google Scholar 

  • Reardon, T., K. Stamoulis, and P. Pingali. 2007. Rural non-farm employment in developing countries in an era of globalization. Agricultural Economics 37(s1): 173–183.

    Article  Google Scholar 

  • Seneviratne, D., and Y. Sun. 2013. Infrastructure and income distribution in ASEAN 5: What are the links? IMF working paper 13/41.

    Google Scholar 

  • World Bank. 2003. Inequality in Latin America and the Caribbean: Breaking with history? World bank Latin America and the Caribbean studies. Washington, DC: World Bank.

    Google Scholar 

  • Zhang, X., and S. Fan. 2004. Public investment and regional inequality in rural China. Agricultural Economics 30: 89–100.

    Article  Google Scholar 

  • Zhu, N., and X. Luo. 2006. Nonfarm activity and rural income inequality: A case study of two provinces in China, World bank research working paper no. 3811. Washington, DC: World Bank.

    Google Scholar 

Download references

Acknowledgements

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.

Author information

Authors and Affiliations

  1. http://link.springer.com/referencework/10.1057/978-1-349-95121-5

    César Calderón & Luis Servén

Authors
  1. César Calderón
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Luis Servén
    View author publications

    You can also search for this author in PubMed Google Scholar

Editor information

Editors and Affiliations

    Copyright information

    © 2014 The Author(s)

    About this entry

    Cite this entry

    Calderón, C., Servén, L. (2014). Infrastructure and Inequality. In: The New Palgrave Dictionary of Economics. Palgrave Macmillan, London. https://doi.org/10.1057/978-1-349-95121-5_2876-1

    Download citation

    • DOI: https://doi.org/10.1057/978-1-349-95121-5_2876-1

    • Received:

    • Accepted:

    • Published:

    • Publisher Name: Palgrave Macmillan, London

    • Online ISBN: 978-1-349-95121-5

    • eBook Packages: Springer Reference Economics and FinanceReference Module Humanities and Social SciencesReference Module Business, Economics and Social Sciences

    Publish with us

    Policies and ethics

    Search

    Navigation