Power infrastructure and income inequality: evidence from Brazilian state-level data using dynamic panel data models

A broad literature has indicated the essential role of power infrastructure in reducing income inequality. However, it is uncertain whether this relationship remains in scenarios with heterogeneities in terms of provision, quality, and access to electricity. This article intends to contribute to the literature by evaluating, in light of the Brazilian reality, how provision, quality, and the interaction between these two characteristics affects income inequality. To account for possible reverse causality problems, we apply the Generalized Method of Moments (GMM) estimators with different specifications to verify the robustness of our estimates. In a scenario where the vast majority of the population has access to electricity, our findings indicate that an expansion in power provision reduces income inequality. Nonetheless, the higher the power infrastructure quality, the smaller the returns of a growing power supply to the reduction of inequality, thus suggesting that richer populations tend to benefit the most from improvements in power quality.