We estimate the causal impact of communication infrastructure quality on growth and structural transformation. We use variation across US counties’ Internet speeds in 2018 and build an instrument using ARPANET, a military network that preceded the modern Internet, with its location documented in historical government reports. We find that doubling Internet speeds increases the 4-year employment growth by 3.3–6.1 percentage points. Faster Internet shifts economic activity toward high-skilled services and away from non-tradeable services while increasing inequality. Industry linkages, capital-skill complementarity, and information and communication technology workers’ sorting rationalize our results. Medium and small cities and rural areas drive our results.

We investigate the persistent impact of a colonial segregation policy on land values in modern Mexico City. During colonial times, Indigenous communities were confined-with varying degrees of success to settlements known as pueblos de indios. Using historical records, we exploit quasi-random variation due to the pueblos' catchment areas and use a Regression Discontinuity Design to estimate the causal effects of pueblos on land prices. We find a 5% land value penalty for areas affected by the colonial policy. The penalty is exacerbated for the pueblos formerly inhabited exclusively by Indigenous populations. Historical evidence and novel digitized maps reveal that these land value penalties have been driven over the past two centuries by low public goods provision, negative economic expectations, and the historical sorting of working-class individuals who built housing structures with small living spaces, or second-nature factors. Moreover, in contemporary data, we observe discontinuities in housing overcrowding and public goods quality within the pueblos' catchment areas. Our results underscore the repercussions of colonial policies on contemporary spatial equilibria, clarifying the mechanisms driving historical persistence and offering implications for urban policies. 

I show that domestic trade costs can shape national comparative advantage by studying the impacts of a proposed highway infrastructure upgrade program in Colombia. I build a multisectoral international trade and economic geography model with heterogeneous shipping routes, industry linkages, external economies of scale, and international trade costs that depend on both highways’ speed and ports’ usage. I discipline the model with data on economic accounts, customs transactions, domestic trade, and road travel times. Using the model, I show that improvements to the national Ruta del Sol highway would shift Colombia’s comparative advantage toward manufacturing. These upgrades would reduce intermediate input prices, lowering unit production costs across all regions, thus inducing an export boom. The manufacturing exports would grow the most because the highway connects the top manufacturing region with ports specialized in manufacturing shipments. Industry linkages favor manufacturing since this sector uses intensively tradable intermediate inputs, and their trade rises due to the road project. Last, external economies of scale also benefit manufacturing because agglomeration forces are stronger for this sector relative to others.

I show that local commodity booms can induce regional industrialization. I document that the empirical relationship between regional oil production and local manufacturing activity can be positive or negative, depending on the manufacturing sector. Then, I simulate the spatial and sectoral spillovers of two different local commodity booms (oil and coffee) that occur in Antioquia, a major Colombian manufacturing region. I focus on how the local commodity booms impact Antioquia itself and neighboring regions. I use an economic geography model with industry linkages and discipline the model with administrative data. First, I find that the effects of a local commodity boom in the manufacturing activity of the same region where the boom occurs depend on the strength of the industry linkages of the commodity with manufacturing sectors. Second, my simulations show that the services sector in the commodity-producing region experiences a negative shock while the services sector in neighboring regions benefit. Third, I observe that a local commodity boom can industrialize neighboring regions. These findings remain relatively similar under closed and open economy scenarios. My results suggest that geography and industry linkages are essential to understand how commodity booms impact structural transformation. I conclude that commodities can lead to industrialization due to industry linkages, in line with Albert Hirschmann's unbalanced growth hypothesis. Interestingly, Hirschmann thought that only key manufacturing sectors can generate national structural transformation and never considered the possibility that commodities could play this role.

We provide evidence that property tax policies can induce gentrification. Between 2006 and 2008, developers in NYC rushed to claim expiring property tax incentives and built more housing. We instrument the number of new tax-exempt units built by the number of vacant parcels available before these incentives expired. Using novel building-level data and a DiD-IV approach, we find that existing buildings’ rents increased by 2.16% in response to a 1% increase in rental stock within a 150-meter radius. We document that the new tax-exempt buildings generated new amenities, thus attracting to nearby blocks high-income, college-educated, young and white households. Moreover, new tax-exempt housing units reduce school enrollment. These findings indicate that new construction induced by property tax exemptions can increase inequality locally by spurring gentrification within neighborhoods. Our results do not imply that local governments should restrict the construction of new housing. Rather, our findings suggest that local tax policies can have unexpected inequality outcomes. Last, we provide explanations that reconcile the opposite results in the literature of the effect of new housing on rents at the neighborhood level.