The Value of Rural and Urban Public Infrastructure

David Albouy, Heejin Kim

Economic Development Quarterly, August 2022, 36(3)

Abstract:

We estimate the value of public infrastructure using a panel of rural and urban counties in the United States from 1970 to 2012. Regression estimates imply public infrastructure increases employment more in urban counties, while improving house values more in rural ones; positive effects on income are similar. Spatial equilibrium modeling suggests public capital has quality-of-life and productivity benefits similar in urban and rural areas, but does more to reduce costs of providing housing in urban ones. While public investments in rural and urban counties appear to pass conventional cost-benefit tests, dollar-per-dollar they are more valuable in urban counties.