Trade and Development Seminar with Nick Tsivanidis (UC-Berkeley)

Spatial Spillovers from Urban Redevelopments: Evidence from Mumbai’s Textile Mills

This paper examines the effects of redeveloping central parts of developing country cities with high-rise, market rate buildings. We exploit a unique policy experiment in Mumbai that suddenly led 15% of central city land occupied by the city’s defunct textile mills to be redeveloped into high-rises during the 2000s. To measure the spatial spillovers from this new construction, we digitize a host of new spatially disaggregated administrative data and use machine vision and text classification techniques to measure changing slums and demographic composition nearby. We find evidence of sizable local spillovers that increase formal sector house prices and drive a process of gentrification where slums, low-skill population shares and informal employment all fall. To disentangle the source of these spillovers and quantify indirect and overall welfare effects, we develop and estimate a dynamic quantitative spatial model with informal floorspace, non-homothetic preferences and relocation frictions.

Speaker =  Nick Tsivanidis (Berkeley)

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