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The Burden of Water Shortages on Informal Firms
- Land Economics
- University of Wisconsin Press
- Volume 95, Number 1, February 2019
- pp. 91-107
- Article
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ABSTRACT:
The informal sector in developing economies is a significant source of livelihood for a sizable portion of the population. This study uncovers the effect of poor water infrastructure on the productivity of informal firms. This is achieved using firm-level data for 12 developing economies between 2009 and 2014. The findings indicate that an increase of one standard deviation of the total duration of water shortages in a month can lead to annual average losses of about 14.5% of the monthly sales per worker for the average informal firm in the sample that uses water for business activities. (JEL O17, Q25)