Locations and Neighborhoods in Urbanizing Africa Simon Franklin - PowerPoint PPT Presentation

Locations and Neighborhoods in Urbanizing Africa Simon Franklin London School of Economics UNU-WIDER Conference Helsinki September 2015

Outline for the talk Three points of motivation: Rural-urban migration. 1 Role of neighborhoods for economic outcomes. 2 Welfare and housing in cities. 3 Questions for urban research Two examples of randomized experiments from Addis Ababa Lower transport costs. 1 Subsidized housing and relocation. 2

Agenda Migration (1) Migration will drive urbanization Birth rates in African cities are falling. Migration flows to cities are enormous. Addis Ababa (1997-2007): Growth due to birth rate: < 3 % (versus 40 % in rural areas). Gained 25% of its population in migrants. Many migrants are young people, often moving separately from their families, and looking for jobs or to pursue education .

Agenda Neighborhood Effects (2) The role of neighborhoods Chetty et al (2015): Differences in income-mobility across different areas of the US. Moving to Opportunity Experiment confirms this. ◮ And evidence that moving (geographically) makes a big difference. (Conclusion is not that we should knock down bad neighborhoods!) Large literature on the importance of neighborhoods for: access to services, social interactions, schooling, access to jobs. Know very little about this in the context of developing countries...

Agenda Neighborhood Effects Spatial inequality in Africa? We do know that people who live, or move to, cities... ... have higher earnings (Young, 2013) and higher living standards (Gollin et al, 2015). ... and that they face barriers to those movements because moving to a city is risky (Bryan et al, 2015).

Agenda Neighborhood Effects Spatial inequality in Africa? We do know that people who live, or move to, cities... ... have higher earnings (Young, 2013) and higher living standards (Gollin et al, 2015). ... and that they face barriers to those movements because moving to a city is risky (Bryan et al, 2015). We don’t know what happens within cities: Where new migrants are living and how that influences economic outcomes. What makes urban life risky, and how those risks can be mitigated. About the role of networks, neighborhoods, public services in urban areas.

Agenda Neighborhood Effects Spatial inequality in Africa? Growing body of evidence on slums (Marx, Suri, Stoker; 2013) ...upgrading and tenure security. New slums, where migrants live are, increasing going to be located far away from city centres. Long term residents of slums face rent pressures as cities grow. But mobility is important, and requires functioning rent markets.

Agenda Urban transfers (3) Welfare and social services in Urban Africa Governments and donors increasingly spending on transfers in urban areas. Will these be appropriate?

Agenda Urban transfers (3) Welfare and social services in Urban Africa Governments and donors increasingly spending on transfers in urban areas. Will these be appropriate? Social safety nets. ◮ Mitigate risk/vulnerability for migrants? Impact on labour supply? Housing. ◮ Built in the right places? Foster good neighborhoods? ◮ Allow for mobility? How are new migrants housed?

Agenda Urban transfers Urban research agenda What are the impacts of housing policies and welfare ... on urban labour markets, and neighborhoods? ... migration rates, and who migrates? Alot of evidence from rural areas, not cities.

Agenda Urban transfers Urban research agenda What are the impacts of housing policies and welfare ... on urban labour markets, and neighborhoods? ... migration rates, and who migrates? Alot of evidence from rural areas, not cities. Because research is hard to do in urban areas, especially at the neighborhood level fewer natural experiments. 1 geographic disaggregation of data. 2 RCTs harder to perform because of spillovers & GE effects. 3

Experiments in Addis Ababa Research in urban Ethiopia Does it matter where people live? The impacts of reduced transport costs on job search in Addis 1 Ababa. The impacts of highly subsidized government condominium 2 housing, located far from the city, on many economic outcomes.

Experiments in Addis Ababa Addis Ababa: Urban Density

Experiments in Addis Ababa Population 4 million. Projection- 8 million by 2025

Experiments in Addis Ababa Firms are clustered in the centre

Experiments in Addis Ababa Jobs are in the center...

Experiments in Addis Ababa ...Especially skilled and professional jobs

Experiments in Addis Ababa Information about jobs is also located in the center

Experiments in Addis Ababa Getting to the jobs is expensive

Transport and job search Are individuals living on the periphery prevented from accessing jobs because of where they live? I run a randomized control trial distributing non-fungible transport subsidies for 12 weeks, conducted in Addis Ababa.

Transport and job search Are individuals living on the periphery prevented from accessing jobs because of where they live? I run a randomized control trial distributing non-fungible transport subsidies for 12 weeks, conducted in Addis Ababa. I show that lowering search costs caused job seekers to: Search more (using a high-frequency panel). Find better jobs.

Transport and job search Are individuals living on the periphery prevented from accessing jobs because of where they live? I run a randomized control trial distributing non-fungible transport subsidies for 12 weeks, conducted in Addis Ababa. I show that lowering search costs caused job seekers to: Search more (using a high-frequency panel). Find better jobs. The subsidies only bring those on the periphery to the centre. Evidence that distance from jobs generates frictions and inequality in labour markets.

Transport and job search Vulnerability and Volatility Study makes use of weekly phone call data to track outcomes. ◮ Young people’s outcomes are extremely volatile: work, search, expenditure. ◮ Movements between formal/informal, temporary work and casual labour. ◮ Construction & domestic work. Transport subsidies reduce the rate at which job seekers become discouraged. Transport subsidies reduce participation in temporary work.

Transport and job search Percentage of Individuals Searching over time 1 Treatment Control .9 .8 .7 .6 .5 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 Week

Transport and job search Targetting and Take-up Study population made up of two groups: Found and interviewed at the central jobs in central Addis 1 Ababa. Found and interviewed at home in neighborhoods of the city. 2 Though I find impact in both groups, subsidies more useful for the highly motivated individuals.

Transport and job search Targetting and Take-up Study population made up of two groups: Found and interviewed at the central jobs in central Addis 1 Ababa. Found and interviewed at home in neighborhoods of the city. 2 Though I find impact in both groups, subsidies more useful for the highly motivated individuals. Take-up: The subsidies were non-fungible, so only taken up by individuals who had use for them, or were motivated to search for work.

Transport and job search Implications of Transport Subsidy Study Evidence that reducing transport costs, all else equal, leads to better employment outcomes. Urban planning: Make central housing available and affordable. Reduce transport costs. Cash constraints and large distances from jobs could be locking some individuals out of labour markets. Role for well targeted welfare programs for migrants and other vulnerable youth in transition.

Government housing and neighborhoods

Government housing and neighborhoods Housing Challenge Housing Challenges in Africa & Ethiopia Upgrading or Relocation?

Government housing and neighborhoods Housing Challenge Housing Challenges in Africa & Ethiopia Upgrading or Relocation? Integrated Housing Development Program 4 or 5 story condominium houses. Ownership transferred: subsidized mortgages. 50 , 000 + units per year. Lottery for opportunity to move into the housing.

Government housing and neighborhoods Housing Challenge Where will the new housing be built?

Government housing and neighborhoods Housing Challenge Where will the new housing be built?

Government housing and neighborhoods Housing Challenge Moving to or away from Opportunity?

Government housing and neighborhoods Study Design Baseline survey of 2000 households in June 2015 Sample of 1000 households who won March lottery... Will be moving into new housing within three months, in 200 corridors in 9 housing sites, 4 different neighborhoods.

Government housing and neighborhoods Study Design Baseline survey of 2000 households in June 2015 Sample of 1000 households who won March lottery... Will be moving into new housing within three months, in 200 corridors in 9 housing sites, 4 different neighborhoods. ... and 1000 households still waiting for housing, who were eligible for March lottery Matched 1-1 to winners on observables. Stand to win in the next lottery, in new sites, in the next year. Ex ante 50 % chance of winning in March lottery.