Impact of infrastructure on rural household income and inequality in Nepal

TY - JOUR

T1 - Impact of infrastructure on rural household income and inequality in Nepal

AU - Charlery, Lindy Callen

AU - Qaim, Matin

AU - Smith-Hall, Carsten

PY - 2016/4/2

Y1 - 2016/4/2

N2 - Weak public infrastructure may contribute to poverty and inequality. Studies have found that roads are a key factor affecting rural incomes in developing countries. Yet, there is relatively scant evidence of the economic impacts of rural roads at the individual household level. This study contributes to the literature by empirically analysing the effects of rural road construction on household income and income inequality in Nepal. Using a quasi-experimental design, a difference-in-difference approach is developed and employed to analyse household (n = 177) data before and after road construction. We find that the new road had a significantly positive impact on mean household income of USD 235 (28%). Contrary to expectations, we do not find an increase in income inequality. Compared to the counterfactual site, it appears that the road has rather contributed to decreasing income inequality. The poorest households gained most from the road construction, making it a pro-poor development intervention.

AB - Weak public infrastructure may contribute to poverty and inequality. Studies have found that roads are a key factor affecting rural incomes in developing countries. Yet, there is relatively scant evidence of the economic impacts of rural roads at the individual household level. This study contributes to the literature by empirically analysing the effects of rural road construction on household income and income inequality in Nepal. Using a quasi-experimental design, a difference-in-difference approach is developed and employed to analyse household (n = 177) data before and after road construction. We find that the new road had a significantly positive impact on mean household income of USD 235 (28%). Contrary to expectations, we do not find an increase in income inequality. Compared to the counterfactual site, it appears that the road has rather contributed to decreasing income inequality. The poorest households gained most from the road construction, making it a pro-poor development intervention.

U2 - 10.1080/19439342.2015.1079794

DO - 10.1080/19439342.2015.1079794

M3 - Journal article

SN - 1943-9342

VL - 8

SP - 266

EP - 286

JO - Journal of Development Effectiveness

JF - Journal of Development Effectiveness

IS - 2

ER -