Hundanol Kebede Presents Research at MWIEDC

Wednesday, April 22, 2020

Hundanol presents his paper, “The gains from market integration: The welfare effects of new rural roads in Ethiopia,” at the Midwest International Conference on Development Economics (MWIEDC), held at Purdue University. In his paper, he estimates the welfare gains from a massive rural road expansion project that doubled the total road length in the country between 2011 and 2015.  He uses tools from international trade theory and details household level data to quantify household-level welfare gains from the road expansion and how much of that is attributed to trade mechanisms. He shows that the road expansion increased market integration and village specialization in comparative advantage crops. One of the paper’s novel contributions is that it shows how increased road connectivity would cause household production decisions to be dictated by market prices rather than consumption preferences – commonly known as separability. That is, road connectivity decreases the correlation between household land allocation across different crops and budget allocation across crops. This leads to significant efficiency gains because land will be reallocated to crops that have higher market value.