The Long and Winding Roads: Roads, Inequality, and Growth in Colombia

We measure the impact on economic performance and land ownership inequality in municipalities of a large scale program of road network expansions and improvements that occurred in Colombia between 1993 to 2012. The treatment is measured as improvements in market access to incorporate network effects. We find that roads improve market access, and this increases both municipality GDP and land ownership inequality. We address endogeneity concerns by using two instruments. First, using detailed geographical information we create a least cost path counterfactual for the Colombian road networks linking important cities in 1938. We use this least cost path to calculate a counterfactual market access measure that is determined by exogenous topographic accidents. Next, we build an alternative market access measure which focuses on semi-random market access changes stemming from increased exposure to markets of smaller cities which were not determinant in defining the road network shape.