The Effects of Rural Electrification in India: An Instrumental Variable Approach at the Household Level
90 Pages Posted: 8 Jul 2020
Date Written: June 12, 2020
Governments in developing countries are investing billions of dollars to increase electricity access in rural areas, but the literature on the impact of these investments has produced mixed results. We leverage a unique characteristic of household electrification policy in Uttar Pradesh, India, whereby only households within 40 meters of an electricity pole are eligible for a legal electrical connection, to estimate the causal impact of electrification using a pre-registered instrumental variable design. With an original survey of 686 households across 120 habitations in the Bahraich district of Uttar Pradesh, we find that legal electrification has a positive impact on household expenditures, adult household activities, and ownership and usage of appliances. The results suggest a more optimistic picture about the impact of rural electrification than some previous studies.
Keywords: Rural Electrification, India, Instrumental Variables, Economic Development
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