Publication - Working Paper
Publication - Project Report
Many households and firms in Ethiopia do not have access to grid-based electricity, especially in rural areas. For many people, access to electricity is necessary in order to move from subsistence farming to more productive economic activities. As a result, people move to more urban areas for better employment opportunities and living conditions. This can put a strain on resources and infrastructure in urban centres.
This study therefore tested the hypothesis that electrification of rural areas could increase production and consumption. We predicted that villages with electricity would see less out-migration and more in-migration than villages without electricity as a result.
Our findings show that the benefits of rural electrification include raising agricultural productivity and allowing for non-agricultural business creation, and not just bringing lights and television to villages. Policymakers should take this concrete benefit of improvement in village productivity into consideration when deciding how to allocate scarce resources to rural electrification projects versus other investments.
We also found that electrifying villages substantially reduces the number of migrants that leave the village, which may reduce the strain on public infrastructure in Addis Ababa and other urban centers. This side benefit of rural electrification projects is relevant for urban planning, for forecasting population patterns, and for regional development policy more generally.