HoSS Working Paper Series,
Stockholm School of Economics, House of Sustainable Society (HoSS)

Abstract: Towns and cities create jobs and income. Can the arrival of new jobs also create a town? We study large agro-industrial labour demand shocks in rural sub-Saharan Africa: flower farms in Kenya. Rising production costs in Europe generate a boom in Kenyan cut-flower export production, providing stable wage jobs for mostly low-skilled women. We exploit the specific requirements of cut-flower production to track the arrival and growth of greenhouses over the last two decades. We find large increases in wage employment and home-to-market transformation within agriculture, especially for women. Urbanisation unfolds: population growth and in-migration are flanked by an emerging private rental market for housing. Housing quality and infrastructure access improve, wealth accumulates. Educational investments increase while fertility decreases. Suggestive evidence highlights that the resulting towns initiate occupational change, motivate forward-looking investment and even survive flower farm closures – indicating towns that can sustain themselves as centres of economic activity.

Keywords: Town formation; wage employment; agro-industry; Kenya

JEL-codes: J21; O14; O18; Q13; R11

Language: English

74 pages, August 16, 2026

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