The Impact of a Rural Road Development Project on Multidimensional Poverty in Nepal

Although the effect of rural road development projects on income poverty has been well studied, little research has been undertaken on the impact on the multiple dimensions of poverty. In this study, we examine the effect of the improvement and construction of rural roads in rural Nepal on household deprivation of health, education, and living standards. We use data from two rounds of the Nepal Demographic and Health Survey (2001, 2011) and a difference-in-differences approach to estimate the average treatment effect on multidimensional poverty. Our study finds evidence of reductions in household deprivation, mainly driven by improvements in asset ownership and dwelling infrastructure. We fail to observe significant effects on the health and education indicators. We test these findings by using propensity-score matching and inverse-probability weighting methods as robustness checks, and generally find similar estimates. In line with the literature in the field, we find heterogeneity in the results across socioeconomic groups and poverty dimensions. Further exploration suggests that household land ownership and economic activity might be driving this heterogeneity. Our work highlights the importance of using multidimensional measures to assess poverty and to empirically evaluate the impact of infrastructure projects on the development of countries, especially their rural regions.