We use detailed data from Indonesian cities to study how variation in density within urban areas affects social capital. For identification, we instrument density with soil characteristics, and control for community averages of observed characteristics. Under plausible assumptions, these controls address sorting on observables and unobservables. We find that lower density increases trust in neighbors and community participation. We also find that lower density is associated with lower interethnic tolerance, but this relationship is explained by sorting. Heterogeneity analysis suggests that crime in dense areas undermines community trust and participation, intensifying the negative impact of density.

Many countries have used place-based policies to stimulate growth in lagging regions. We study Indonesia's Integrated Economic Development Zone (KAPET) program, which provided significant tax-breaks for firms locating in poorer districts in the Outer Islands. Along many dimensions, KAPET districts experienced no better development outcomes than their non-treated counterparts. The tax cuts neither encouraged greater firm entry, increased migration, nor raised local output. To investigate whether regional policies could have been redesigned to increase welfare and stimulate growth, we use a quantitative spatial model with multiple asymmetric regions, informal and formal sectors, costly trade, and costly migration.

This paper examines the effects of cultural distance on internal migration patterns using ethno-linguistic data from Indonesia. I estimate an internal migration gravity equation, utilizing linguistic distance as a proxy for cultural distance and data from the 1930 colonial census to instrument for current linguistic distance. The findings reveal an inverted U-shaped relationship: longer cultural distance encourages migration between culturally close location pairs, but this trend reverses as cultural distance increases. With rich survey data and a quantitative spatial model, the analysis of potential mechanisms suggests that skill complementarity and amenity effects drive the positive impacts, while communication barriers and inter-ethnic tolerance contribute to migration costs.

This study explores the impacts of road improvements in a country characterized by "urbanization without growth." Our analysis reveals that, although road upgrades increase population growth, they do not significantly advance economic development and tend to worsen living conditions. Utilizing a combination of empirical evidence and a spatial equilibrium model, we identify that constrained industrial capacities and congestion from high population density limit the efficacy of road development policies in enhancing GDP and overall welfare. Our results also indicate that strategically targeting road placement in regions with higher economic productivity could yield better economic outcomes.

Can we achieve economic growth while reducing carbon emissions? We investigate the unintended impacts of India’s Special Economic Zones (SEZs), a place-based policy designed to foster economic development, on firms’ energy usage and carbon emissions. Using extensive firm data and a spatial RD-DiD design, we find that SEZs significantly reduce firms’ carbon emissions by 30%. This substantial decline in emissions is predominantly driven by larger firms and those located in regions with access to cleaner energy.

This paper uses detailed data from Indonesian cities to study how variation in density within urban areas affects residential carbon emissions. To address simultaneity, we instrument density with soil characteristics, and to address sorting, we control for community averages of observed characteristics. Preliminary results suggest that while density is positively associated with greater residential carbon emissions, this correlation is driven by income sorting. This suggests that policies aiming to control urban sprawl may not be successful in reducing residential carbon emissions.

This paper studies the effects of capital city relocations on population growth, economic geography, and welfare, using the recent experience of Indonesia as a case study. We first benchmark effect sizes using a synthetic controls approach to study population growth in new capitals following relocations in Tanzania, Nigeria, and Kazakhstan. We then evaluate the welfare effects of Indonesia’s new capital city with a quantitative spatial equilibrium model. The model contains multiple sectors---including public sector employment---endogenous agglomeration and dispersion forces, and a transfer system to finance local public goods.