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Impact of infrastructure on rural household income and inequality in Nepal

Author

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  • Lindy C. Charlery
  • Matin Qaim
  • Carsten Smith-Hall

Abstract

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.

Suggested Citation

  • Lindy C. Charlery & Matin Qaim & Carsten Smith-Hall, 2016. "Impact of infrastructure on rural household income and inequality in Nepal," Journal of Development Effectiveness, Taylor & Francis Journals, vol. 8(2), pages 266-286, June.
    • Handle: RePEc:taf:jdevef:v:8:y:2016:i:2:p:266-286
    DOI: 10.1080/19439342.2015.1079794
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    Cited by:

    1. Khosla, Sunil & Jena, Pradyot Ranjan & Rahut, Dil Bahadur, 2023. "Can rural livelihood programs enhance capabilities and reduce vulnerability to poverty? Evidence from a tribal region of eastern India," Economic Analysis and Policy, Elsevier, vol. 77(C), pages 85-98.
    2. Wanglin Ma & Hongyun Zheng & Amaka Nnaji, 2023. "Cooperative membership and adoption of green pest control practices: Insights from rice farmers," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 67(3), pages 459-479, July.
    3. Yasuharu Shimamura & Satoshi Shimizutani & Eiji Yamada & Hiroyuki Yamada, 2023. "On the inclusiveness of rural road improvement: Evidence from Morocco," Review of Development Economics, Wiley Blackwell, vol. 27(3), pages 1721-1745, August.
    4. Deyou Chen & Lei Wang & Tao Su & Youtao Zhang, 2018. "Canonical Correlation Analysis Between Residents’ Living Standards and Community Management Service Levels in Rural Areas: An Empirical Analysis Based on Municipal Data in Anhui Province," Computational Economics, Springer;Society for Computational Economics, vol. 52(4), pages 1053-1068, December.
    5. Wanglin Ma & Hongyun Zheng & Yueji Zhu & Jianling Qi, 2022. "Effects of cooperative membership on financial performance of banana farmers in China: A heterogeneous analysis," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 93(1), pages 5-27, March.
    6. Julio Aguirre & Elmer Guerrero & Yohnny Campana, 2021. "How effective are protected natural areas when roads are present? An analysis of the Peruvian case," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 23(4), pages 831-859, October.
    7. Shahid Hussain & Fangwei Zhu & Zaigham Ali & Xiaohang Xu, 2017. "Rural Residents’ Perception of Construction Project Delays in Pakistan," Sustainability, MDPI, vol. 9(11), pages 1-16, November.
    8. Lindy Charlery & Martin R. Nielsen & Henrik Meilby & Carsten Smith-Hall, 2016. "Effects of New Roads on Environmental Resource Use in the Central Himalaya," Sustainability, MDPI, vol. 8(4), pages 1-20, April.
    9. Zhou, Qiang & Liu, Yong & Qu, Shen, 2022. "Emission effects of China's rural revitalization: The nexus of infrastructure investment, household income, and direct residential CO2 emissions," Renewable and Sustainable Energy Reviews, Elsevier, vol. 167(C).
    10. Xiao, Han & Zheng, Xinye & Xie, Lunyu, 2022. "Promoting pro-poor growth through infrastructure investment: Evidence from the Targeted Poverty Alleviation program in China," China Economic Review, Elsevier, vol. 71(C).
    11. Huang, Ruting & Yao, Xin, 2023. "The role of power transmission infrastructure in income inequality: Fresh evidence from China," Energy Policy, Elsevier, vol. 177(C).
    12. Lili Li & Zhonggen Zhang & Changluan Fu, 2020. "The subjective well-being effect of public goods provided by village collectives: Evidence from China," PLOS ONE, Public Library of Science, vol. 15(3), pages 1-16, March.
    13. Sun, Mingxing & Xu, Xiangbo & Wang, Le & Li, Chang & Zhang, Linxiu, 2021. "Stable energy, energy inequality, and climate change vulnerability in Pan-Third Pole regions: Empirical analysis in cross-national rural areas," Renewable and Sustainable Energy Reviews, Elsevier, vol. 147(C).
    14. Ina-Kathrin Spey & Denis Kupsch & Kadiri Serge Bobo & Matthias Waltert & Stefan Schwarze, 2019. "The Effects of Road Access on Income Generation. Evidence from An Integrated Conservation and Development Project in Cameroon," Sustainability, MDPI, vol. 11(12), pages 1-14, June.
    15. Suchi Kapoor Malhotra & Howard White & Nina Ashley O. Dela Cruz & Ashrita Saran & John Eyers & Denny John & Ella Beveridge & Nina Blöndal, 2021. "Studies of the effectiveness of transport sector interventions in low‐ and middle‐income countries: An evidence and gap map," Campbell Systematic Reviews, John Wiley & Sons, vol. 17(4), December.
    16. Dan Pan & Yi Yu & Kaiwen Ji, 2024. "The impact of rural living environment improvement programs on the subjective well-being of rural residents in China," Palgrave Communications, Palgrave Macmillan, vol. 11(1), pages 1-17, December.

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