# **Matchmaking in Nairobi: The Role of Land Use**

Paolo Avner<sup>(a)</sup> and Somik Lall<sup>(a)</sup><sup>_1_</sup>

- (a) The World Bank

## **Abstract**

_Well-functioning cities reduce the economic distance between people and economic opportunities. Cities thrive because they enable matchmaking – among people, among firms, and between people and job opportunities. This paper examines employment accessibility in Nairobi, Kenya and evaluates whether modification of land use patterns can contribute to increases in aggregate accessibility. The assessment is based on simulation of counterfactual scenarios of the location of jobs and households throughout the city without new investments in housing or transport infrastructure. The analysis finds that modifications to the spatial layout of Nairobi that encourage land use clustering can increase the share of overall opportunities that can be accessed within a given time-frame. When commuters travel by foot or using the minibus network, the share of accessible economic opportunities within an hour doubles from 11 to 21 percent and from 20 to 42 percent respectively. The analysis also finds that spatial layouts that maximize the number of households that have access to a minimum share of jobs, through a more even jobs-housing balance, come at the expense of average accessibility. This result is interpreted as a trade-off between inclusive and efficient labor markets._

## **1 Introduction**

Cities bring together people, ideas and capital so as to benefit from agglomeration economies which stem from proximity and exchanges (Glaeser and Kahn 2004; Ciccone and Hall 1996). The most common sources of urban agglomeration economies arise from: 1/ labor market interactions (pooling), 2/ linkages between intermediate and final goods producers or input sharing and 3/ knowledge spillovers (Rosenthal and Strange 2004)<sup>2</sup> . In this paper we are primarily concerned with agglomeration economies that arise from labor-market interactions or matching, sharing Bertaud’s (2014) view that cities can primarily be seen as labor markets.

The analysis presented in this paper shows that in Nairobi County, Kenya, employment accessibility tends to be limited for a large share of the population that cannot afford to purchase cars. This situation is problematic both for productivity and for livability. On the productive side, it limits the effective size of the labor markets, thereby preventing workforce/employer sorting which hampers the

> 1 The authors are grateful to Sarah Elizabeth Antos for performing the network analysis which provided the automobile transport times matrix and to Annie Bidgood for GIS assistance. Joel Hamann ensured the processing of the matatu GTFS data through a Dijkstra algorithm that he also coded. Dean Cira and Sheila Kamunyori’s guidance as well as efforts to put us in contact with counterparts in Nairobi and locate datasets are highly appreciated. The authors would also like to thank Nancy Lozano Gracia, Adrien Vogt-Schilb, Gunnar Eskeland, Vernon Henderson, Roger Gorham, Tony Venables, Paul Collier, Daniel Rodriguez, Marianne Fay and Stephane Hallegatte for comments on this work and crucial suggestions.

> 2 A more comprehensive list differentiating between up to 12 types of economies of scale can be found in the 2009 World Development Report (World Bank 2009, p 128).

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