Roads and Jobs in Ethiopia

Does improving roads affect jobs and structural transformation? A novel geocoded data set covering the universe of Ethiopian roads matched with individual data allows the relationship between improvements in road infrastructure and labor-market outcomes over the 1994-2013 period to be identified. At the district level, greater market access due to better roads correlates with the process of structural transformation in Ethiopia. Improvements in market access are related to reductions in the share of agricultural workers and increases in that of workers in the services sector, but not in manufacturing. Heterogeneity in this relationship exists across industries, gender, education level, and age cohorts. Patterns of internal migration and changes in economic opportunities can help rationalize these findings.