Is electrification welfare improving: non-experimental evidence from Rural Bhutan?

Type Working Paper
Title Is electrification welfare improving: non-experimental evidence from Rural Bhutan?
Publication (Day/Month/Year) 2010
Using a cross-sectional survey conducted in Jan 2010 of 2,098 households in rural Bhutan, this paper investigates the income and educational impacts of a mass roll-out of household electrification in rural parts of Bhutan. We designed and administered a household and village-level socio-economic survey in the electrified and nonelectrified villages to collect data on wide range of developmental outcomes. Using Propensity Score Matching (PSM) and propensity-based weighted regression, we find that grid electrification has significant positive impacts on household income and children’s education. Non-farm income is 60-70% higher in the treated households, but there are no significant effect on farm-income. Our findings show that years of schooling for 6-18 years old increase by 0.5 to 0.7 years in the treated households. Additionally, amount of study time at home is 8-10 minutes more in the treated households compared to untreated households. We employed different matching algorithms and our results are robust to all matching estimator and also to propensity-based weighted estimation. Our results suggest significant return to energy infrastructure and provide additional evidence on the impact of infrastructure for rural electrification in developing country. Providing complementary resources, such as credit, business training may help the rural economy realize the full benefits of grid electricity

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