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to infrastructure expenditures in urban areas, higher urbanization rates imply higher levels of infrastructure service provision.

Urbanization (URBAN4) is measured as the annual percentage of total population living in urban areas, interpolated from five-year intervals. The data source for URBAN4 is WDR91SD.

**1.4. Urban-Rural** Balance: The extent of the difference between urban and rural utility levels is hypothesized to influence rural-urban migration rates, and accordingly the pressure on governments for urban services, including infrastructure provision. Further, governments may respond by attempting to increase rural productivity (and utility) in an effort to slow rural-urban migration. Rural infrastructure investments supporting agricultural intensification or rural industry offer one means to increase rural productivity. Both forces imply current expenditures on infrastructure will be positively related to the size of the differential between urban and rural utility or earnings levels.

Sensitivity analysis is conducted to determine the sensitivity of results to three alternative measures of the urban-rural balance. In the theoretical model, a utility balance between the urban and rural sectors is maintained through migration. The first measure of the urban-rural balance is a proxy for the rural-to-urban migration rate (MIGZ). MIGZ is defined as the urban population growth rate minus the total population growth rate. The data source for the urban and total population growth rates is the _Social Indicators of Development 1990_ (World Bank, 1990). The second measure of the urban-rural balance is the agricultural GDP per capita in constant 1980 US dollars (AGCAPK). AGCAPK is calculated as the percentage share of agriculture in GDP, multiplied by GDP in constant 1980 US dollars, all divided by the product of the total population and 1 minus the percentage urban population. The data source for the component variables is WDR91SD. The greater the difference between GDP per capita and AGCAPK, the greater the urban-rural imbalance. Because total GDP per capita is included in all regression models (see 2.1 below) the coefficient of AGCAPK measures the impact of per capita agricultural income, holding GDP per capita constant. The lower the value of AGCAPK, the greater the urban-rural imbalance. The third measure of the urban-rural balance is the percentage share of agriculture in GDP (SAGR4). As noted above, the data source for this variable is WDR91SD. Because both aggregate GDP per capita and the percentage urban population are included in all regressions, the smaller is SAGR4 the greater is the urban-rural imbalance.

**1.5. Labor Force Participation Rate:** In the theoretical model, households supply an amount of labor that is fixed in physical units (e.g., person-years). The labor force participation rate is utilized here to capture differences between countries in the physical amount of labor households supply. Public expenditure on infrastructure influence firm demand for labor, and accordingly, the wage per efficiency unit of labor supplied.' The relationship between the labor force participation rate and public expenditures on infrastructure depends upon whether labor and public infrastructure investments are complements or substitutes in production. If they are complements, then infrastructure