and/or residents of informal settlements. The analysis utilizes a recently collected household survey, the Cities Baseline Survey, which is representative at both the formal and informal residential areas in Nairobi. Finally, we analyze what trade-off Nairobi residents face in selecting residences by examining the link between job accessibility and housing rents in the city. When housing rents are determined in equilibrium in functioning (even informal) housing markets, the rents reflect job accessibility among other characteristics (Rosen 1974). We estimate hedonic regression models to examine the costs of better job accessibility in Nairobi.

Our analysis illustrates how job accessibility is linked to the spatial distributions of housing rents and poverty in Nairobi. We find that Nairobi’s average job accessibility is indeed limited. By spending 30 minutes traveling, a Nairobi resident can on average reach 2 percent and 4 percent of jobs that exist in the city by foot and by minibus, respectively. She or he can reach 7 percent and 24 percent of jobs within an hour by foot and minibus, respectively. Given the fact that a large fraction of Nairobi residents—particularly the low-income—walk to work, this limited job accessibility must have created considerable inefficiencies in the labor market. Moreover, we find that the job accessibility of poorer households and/or residents of informal settlements is overall worse in Nairobi. Compared to richer households (in the fourth per-capita consumption quartile), poor households (in the first per-capita consumption quartile) can on average reach 20 percent fewer jobs by foot within 60 minutes. Similarly, the number of jobs that residents of informal settlements can reach by foot within 60 minutes is 30 percent smaller than for residents in formal residential areas. Our hedonic regression analysis demonstrates that it is costly to live in housing with better job accessibility in Nairobi, explaining in part why poorer households have such limited job accessibility.

Our findings illustrate the need to assess and enhance access to economic opportunities for disadvantaged workers in African cities, and Nairobi is a case in point. While the poverty headcount ratio in Nairobi declined from 21 percent in 2005/06 to 17 percent in 2015/16, the number of poor slightly increased during the period (KNBS 2018). Despite the overall low poverty rate, nearly 30 percent of residents in informal settlements still remain in poverty (World Bank 2018). More than 20 percent of the poor in Nairobi are unemployed, and about 40 percent of the poor are casual workers. The 2015/16 Kenya Integrated Household Budget Survey (KIHBS) also shows that only 15 percent of the poor use a minibus for commuting, while 70 percent of the poor walk to work. Despite the concentration of poverty, worse living conditions, and limited job accessibility in Nairobi’s informal settlements, it has been difficult for many residents to move out of informal settlements (Nakamura and Karasawa 2018). In such situations, it is critically important to enhance job accessibility to support the poor and/or residents of informal settlements to escape from poverty.

Our research is related to three bodies of literature. First, our work is related to the literature focusing on job accessibility from a perspective of agglomeration economies. Facilitating better matching between firms and workers is, among other channels such as sharing and learning effects, a critical component of agglomeration economies (Duranton and Puga 2004). A body of empirical studies estimated the effects of city size and density for productivity, though most of them focus on developed countries (see Combes and Gobillon 2015 for a review). Limited job accessibility could, however, restrict such benefits of agglomeration economies. In view of cities as labor markets (Bertaud 2014), some studies assess accessibility, measured as the number of opportunities an individual can access within a given amount of time, for Buenos Aires (Quirós and Mehndiratta 2015), Dakar (Stokenberga 2017), and Nairobi (Avner and Lall 2016). We advance the Nairobi study by Avner and Lall (2016) by focusing on accessibility to _jobs_ instead of _opportunities_ proxied by land use.

3