The Impacts of Electricity Access: Evidence from Rural India

Abstract

This thesis studies the causal effects of electricity access and quality on villages and households in India. Using three panels of rural household data, we quantify the impacts of short-term (0-7 years) and long-term (7-17 years) access on household well-being. As our identification strategy, we use a propensity-score-weighted-difference-in-differences design and find that electricity access increases consumption and education in the long term, and reduces the time spent by women on fuel collection, although we find no significant impact on agricultural income, agricultural land holding, and kerosene consumption. We observe differences in the impact on rich households and poor households, and on less-developed and more-developed states, but the long-term impacts are consistently found to be greater and more significant than the short-term gains. In addition to the study on short-term and long-term access, we also investigate the village-level spillover effects of electricity. Employing a propensity-score-weighted-difference-in-differences strategy, we find positive spillover effects of village electrification on the consumption of households not connected to the grid. Subsequently, using a difference-in-differences design, we find that improvements in reliability lead to falling agricultural labor wage rates. To complement the analysis, we investigate the channels through which wages may be affected. We find that although the mechanization of agriculture increases the demand for agricultural labor, better reliability reduces women’s time burden of fuel collection and allows them to provide labor to family farms, reducing the demand for hired agricultural labor.