Slum Upgrading: Short Term Results from an Urban Road Pavement Experiment in Mexico∗ VERY PRELIMINARY

Urban peripheries in many developing country cities lack basic local public goods like pavement, water, sewerage and electricity. This is the first paper to obtain welfare impacts of slum infrastructure upgrading using an experimental design. Specifically, the paper reports results from an experiment in urban road pavement provision in Mexico. The results suggest that households living in streets that were paved obtained more credit and increased motor vehicle ownership. They also presented higher income and expenditures and were more likely to have made home improvements. This suggests some channels through which urban slum upgrading can affect growth. JEL: C92, C93, H41, O15, O12 ∗We would like to thank Anne Case, Angus Deaton, Alan Krueger, David Lee, Adriana Lleras-Muney, Sam Schulhofer-Wohl, Christina Paxson, and Cecilia Rouse for their help and advice in this research project. The collaboration of the Acayucan 2005-2007 and 2008-2010 Municipal administrations is gratefully acknowledged. We also recognize the effort of José Luis Palma, Luz Uribe and Monica González at INSAD who were in charge of the survey. Financial aid from Princeton University, Princeton Woodrow Wilson Scholars, Princeton Industrial Relations Section, Princeton Research Program in Development Studies, Universitat d’Alacant, and the Lincoln Institute of Land Policy is gratefully acknowledged. Any errors contained in the paper are our own. †50 University Hall, MC 7360 Berkeley, CA 94720. Email: [email protected] ‡Economics Department, Universitat d’Alacant, Sant Vicent 03690 Alicante, Spain Email:[email protected]