Are the Benefits of Electrification Realized Only in the Long Run? Evidence from Rural India

Abstract

Experimental studies typically find smaller benefits of electrification than do observational studies. Is this because the latter typically observe benefits after a longer period of time? Using three waves of data on rural households from the Human Development Profile of India and the India Human Development Survey, we quantify the impacts of short-term (0–7 years) and long-term (7–17 years) electricity access on household well-being. We use a propensity-score-weighted-difference-in-differences design that controls for spillover effects and find that electricity access increases per capita consumption and education in the long term, and reduces the time spent by women on fuel collection. Per capita consumption grows by 2.5 percent per annum more in the long-term connected group than in the control group. We do not find significant effects on agricultural income, suggesting diversification away from agriculture. Short-term effects are smaller and not statistically significant for any outcome variable.