IDEAS home Printed from https://ideas.repec.org/a/eee/regeco/v91y2021ics0166046220303100.html
   My bibliography  Save this article

Rural electrification, migration and structural transformation: Evidence from Ethiopia

Author

Listed:
  • Fried, Stephie
  • Lagakos, David

Abstract

To what extent does rural electrification induce structural change and alter migration patterns? This paper addresses this question using a simple multi-sector spatial model and evidence from a panel of rural Ethiopian villages during its recent expansion of electricity supply. We find that electrification raised irrigation rates, agricultural yields and non-agricultural business activity. Furthermore, electrified villages experienced higher rates of in-migration and lower rates of out-migration. Each of these predictions is qualitatively consistent with the predictions of our model. Our results suggest that rural electrification helped facilitate structural transformation of villages economies in Ethiopia and slowed out-migration from rural areas.

Suggested Citation

  • Fried, Stephie & Lagakos, David, 2021. "Rural electrification, migration and structural transformation: Evidence from Ethiopia," Regional Science and Urban Economics, Elsevier, vol. 91(C).
    • Handle: RePEc:eee:regeco:v:91:y:2021:i:c:s0166046220303100
    DOI: 10.1016/j.regsciurbeco.2020.103625
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0166046220303100
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.regsciurbeco.2020.103625?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Dinkelman, Taryn & Schulhofer-Wohl, Sam, 2015. "Migration, congestion externalities, and the evaluation of spatial investments," Journal of Development Economics, Elsevier, vol. 114(C), pages 189-202.
    2. B. Kelsey Jack & Grant Smith, 2015. "Pay as You Go: Prepaid Metering and Electricity Expenditures in South Africa," American Economic Review, American Economic Association, vol. 105(5), pages 237-241, May.
    3. Gabriel M. Ahlfeldt & Stephen J. Redding & Daniel M. Sturm & Nikolaus Wolf, 2015. "The Economics of Density: Evidence From the Berlin Wall," Econometrica, Econometric Society, vol. 83, pages 2127-2189, November.
    4. Rodolfo E. Manuelli & Ananth Seshadri, 2014. "Frictionless Technology Diffusion: The Case of Tractors," American Economic Review, American Economic Association, vol. 104(4), pages 1368-1391, April.
    5. Gaggl, Paul & Gray, Rowena & Marinescu, Ioana & Morin, Miguel, 2021. "Does electricity drive structural transformation? Evidence from the United States," Labour Economics, Elsevier, vol. 68(C).
    6. Rud, Juan Pablo, 2012. "Electricity provision and industrial development: Evidence from India," Journal of Development Economics, Elsevier, vol. 97(2), pages 352-367.
    7. Taryn Dinkelman, 2011. "The Effects of Rural Electrification on Employment: New Evidence from South Africa," American Economic Review, American Economic Association, vol. 101(7), pages 3078-3108, December.
    8. Bryan, Gharad & Morten, Melanie, 2019. "The aggregate productivity effects of internal migration: evidence from Indonesia," LSE Research Online Documents on Economics 88177, London School of Economics and Political Science, LSE Library.
    9. Stephie Fried & David Lagakos, 2023. "Electricity and Firm Productivity: A General-Equilibrium Approach," American Economic Journal: Macroeconomics, American Economic Association, vol. 15(4), pages 67-103, October.
    10. Fisher-Vanden, Karen & Mansur, Erin T. & Wang, Qiong (Juliana), 2015. "Electricity shortages and firm productivity: Evidence from China's industrial firms," Journal of Development Economics, Elsevier, vol. 114(C), pages 172-188.
    11. Uy, Timothy & Yi, Kei-Mu & Zhang, Jing, 2013. "Structural change in an open economy," Journal of Monetary Economics, Elsevier, vol. 60(6), pages 667-682.
    12. Molly Lipscomb & A. Mushfiq Mobarak & Tania Barham, 2013. "Development Effects of Electrification: Evidence from the Topographic Placement of Hydropower Plants in Brazil," American Economic Journal: Applied Economics, American Economic Association, vol. 5(2), pages 200-231, April.
    13. Brueckner, Jan K. & Zenou, Yves, 1999. "Harris-Todaro models with a land market," Regional Science and Urban Economics, Elsevier, vol. 29(3), pages 317-339, May.
    14. Hunt Allcott & Allan Collard-Wexler & Stephen D. O'Connell, 2016. "How Do Electricity Shortages Affect Industry? Evidence from India," American Economic Review, American Economic Association, vol. 106(3), pages 587-624, March.
    15. Prescott, Edward C, 1998. "Needed: A Theory of Total Factor Productivity," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 39(3), pages 525-551, August.
    16. Wang, Yin-Chi & Liao, Pei-Ju & Wang, Ping & Yip, Chong Kee, 2024. "To stay or to migrate? When Becker meets Harris-Todaro," European Economic Review, Elsevier, vol. 169(C).
    17. Stokey, Nancy L., 2001. "A quantitative model of the British industrial revolution, 1780-1850," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 55(1), pages 55-109, December.
    18. Fields, Gary S., 1975. "Rural-urban migration, urban unemployment and underemployment, and job-search activity in LDCs," Journal of Development Economics, Elsevier, vol. 2(2), pages 165-187, June.
    19. Brueckner, Jan K. & Lall, Somik V., 2015. "Cities in Developing Countries," Handbook of Regional and Urban Economics, in: Gilles Duranton & J. V. Henderson & William C. Strange (ed.), Handbook of Regional and Urban Economics, edition 1, volume 5, chapter 0, pages 1399-1455, Elsevier.
    20. Trevor Tombe, 2015. "The Missing Food Problem: Trade, Agriculture, and International Productivity Differences," American Economic Journal: Macroeconomics, American Economic Association, vol. 7(3), pages 226-258, July.
    21. David Lagakos, 2020. "Urban-Rural Gaps in the Developing World: Does Internal Migration Offer Opportunities?," Journal of Economic Perspectives, American Economic Association, vol. 34(3), pages 174-192, Summer.
    22. Paula Bustos & Bruno Caprettini & Jacopo Ponticelli, 2016. "Agricultural Productivity and Structural Transformation: Evidence from Brazil," American Economic Review, American Economic Association, vol. 106(6), pages 1320-1365, June.
    23. Ama Baafra Abeberese, 2017. "Electricity Cost and Firm Performance: Evidence from India," The Review of Economics and Statistics, MIT Press, vol. 99(5), pages 839-852, December.
    24. Samuel Bazzi & Arya Gaduh & Alexander D. Rothenberg & Maisy Wong, 2016. "Skill Transferability, Migration, and Development: Evidence from Population Resettlement in Indonesia," American Economic Review, American Economic Association, vol. 106(9), pages 2658-2698, September.
    25. Teignier, Marc, 2018. "The role of trade in structural transformation," Journal of Development Economics, Elsevier, vol. 130(C), pages 45-65.
    26. A. D. Roy, 1951. "Some Thoughts On The Distribution Of Earnings," Oxford Economic Papers, Oxford University Press, vol. 3(2), pages 135-146.
    27. Williamson, Jeffrey G., 1988. "Migration and urbanization," Handbook of Development Economics, in: Hollis Chenery & T.N. Srinivasan (ed.), Handbook of Development Economics, edition 1, volume 1, chapter 11, pages 425-465, Elsevier.
    28. Harris, John R & Todaro, Michael P, 1970. "Migration, Unemployment & Development: A Two-Sector Analysis," American Economic Review, American Economic Association, vol. 60(1), pages 126-142, March.
    29. Gharad Bryan & Melanie Morten, 2019. "The Aggregate Productivity Effects of Internal Migration: Evidence from Indonesia," Journal of Political Economy, University of Chicago Press, vol. 127(5), pages 2229-2268.
    30. Jonathan Eaton & Samuel Kortum, 2002. "Technology, Geography, and Trade," Econometrica, Econometric Society, vol. 70(5), pages 1741-1779, September.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Han, Jiashi & Zhang, Lei & Li, Yang, 2022. "Spatiotemporal analysis of rural energy transition and upgrading in developing countries: The case of China," Applied Energy, Elsevier, vol. 307(C).
    2. Kassem, Dana, 2024. "Does electrification cause industrial development? Grid expansion and firm turnover in Indonesia," Journal of Development Economics, Elsevier, vol. 167(C).
    3. Richard S. J. Tol, 2023. "Navigating the energy trilemma during geopolitical and environmental crises," Papers 2301.07671, arXiv.org.
    4. Mensah, Justice Tei, 2024. "Jobs! Electricity shortages and unemployment in Africa," Journal of Development Economics, Elsevier, vol. 167(C).
    5. Satoshi Shimizutani & Eiji Yamada, 2023. "Transformation of international migrants in head wind: Evidence from Tajikistan in the 2010s," Review of Development Economics, Wiley Blackwell, vol. 27(1), pages 525-549, February.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Stephie Fried & David Lagakos, 2023. "Electricity and Firm Productivity: A General-Equilibrium Approach," American Economic Journal: Macroeconomics, American Economic Association, vol. 15(4), pages 67-103, October.
    2. Busso, Matias & Chauvin, Juan Pablo & Herrera L., Nicolás, 2021. "Rural-urban migration at high urbanization levels," Regional Science and Urban Economics, Elsevier, vol. 91(C).
    3. Perez Sebastian,Fidel & Steinbuks,Jevgenijs & Feres,Jose Gustavo & Trotter,Ian Michael, 2020. "Electricity Access and Structural Transformation : Evidence from Brazil's Electrification," Policy Research Working Paper Series 9182, The World Bank.
    4. David Lagakos & Ahmed Mushfiq Mobarak & Michael E. Waugh, 2023. "The Welfare Effects of Encouraging Rural–Urban Migration," Econometrica, Econometric Society, vol. 91(3), pages 803-837, May.
    5. Breinlich, Holger & Ottaviano, Gianmarco I.P. & Temple, Jonathan R.W., 2014. "Regional Growth and Regional Decline," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 2, chapter 4, pages 683-779, Elsevier.
    6. Selod, Harris & Shilpi, Forhad, 2021. "Rural-urban migration in developing countries: Lessons from the literature," Regional Science and Urban Economics, Elsevier, vol. 91(C).
    7. Daniela Vidart, 2024. "Human Capital, Female Employment, and Electricity: Evidence from the Early 20th-Century United States," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 91(1), pages 560-594.
    8. Abiodun, Kehinde & Gilbert, Ben, 2022. "Does universal electrification shield firms from productivity loss?," World Development Perspectives, Elsevier, vol. 28(C).
    9. Enrico Nano, 2022. "Electrifying Nigeria: the Impact of Rural Access to Electricity on Kids' Schooling," IHEID Working Papers 03-2022, Economics Section, The Graduate Institute of International Studies.
    10. Bo, Shiyu & Chen, Ting & Liu, Cong, 2022. "Trade shocks, industrial growth, and electrification in early 20th-century China," Journal of Comparative Economics, Elsevier, vol. 50(3), pages 732-749.
    11. Simone Tagliapietra & Giovanni Occhiali & Enrico Nano & Robert Kalcik, 2020. "The impact of electrification on labour market outcomes in Nigeria," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 37(3), pages 737-779, October.
    12. Kassem, Dana, 2024. "Does electrification cause industrial development? Grid expansion and firm turnover in Indonesia," Journal of Development Economics, Elsevier, vol. 167(C).
    13. Mensah, Justice Tei, 2024. "Jobs! Electricity shortages and unemployment in Africa," Journal of Development Economics, Elsevier, vol. 167(C).
    14. Singer, Gregor, 2024. "Complementary inputs and industrial development: can lower electricity prices improve energy efficiency?," LSE Research Online Documents on Economics 122365, London School of Economics and Political Science, LSE Library.
    15. Tushar Bharati & Adnan M. S. Fakir & Wina Yoman, 2024. "Internal Migration and Labor Market Outcomes in Indonesia," Economic Development and Cultural Change, University of Chicago Press, vol. 72(2), pages 997-1040.
    16. Lagakos, David & Marshall, Samuel & Mobarak, Ahmed Mushfiq & Vernot, Corey & Waugh, Michael E., 2020. "Migration costs and observational returns to migration in the developing world," Journal of Monetary Economics, Elsevier, vol. 113(C), pages 138-154.
    17. Cole, Matthew A. & Elliott, Robert J.R. & Occhiali, Giovanni & Strobl, Eric, 2018. "Power outages and firm performance in Sub-Saharan Africa," Journal of Development Economics, Elsevier, vol. 134(C), pages 150-159.
    18. Meeks, Robyn C. & Omuraliev, Arstan & Isaev, Ruslan & Wang, Zhenxuan, 2023. "Impacts of electricity quality improvements: Experimental evidence on infrastructure investments," Journal of Environmental Economics and Management, Elsevier, vol. 120(C).
    19. Kenneth Lee & Edward Miguel & Catherine Wolfram, 2020. "Does Household Electrification Supercharge Economic Development?," Journal of Economic Perspectives, American Economic Association, vol. 34(1), pages 122-144, Winter.
    20. Meles, Tensay Hadush, 2020. "Impact of power outages on households in developing countries: Evidence from Ethiopia," Energy Economics, Elsevier, vol. 91(C).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:regeco:v:91:y:2021:i:c:s0166046220303100. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/regec .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.