Analyzing the Impact of Road Infrastructure Spending on Rural Household Welfare (Food Security) in Laos: A Comparison of DID and PSM-DID Approaches

Abstract

To investigate the effects of road infrastructure investments on rural household welfare, this study combines DID analysis with Propensity Score Matching (PSM) and Difference-in-Differences (DID). Initial DID results point to a non-significant impact of road infrastructure investment on household well-being; however, PSM-DID analysis yields different conclusions. The non-significant DID results show a possible mismatch between theoretical predictions and actual results, challenging preconceived notions and contradicting empirical data. Nonetheless, the next PSM-DID analysis shows that investments in road infrastructure have a notable and beneficial effect on household welfare, especially when it comes to real food spending per capita. These findings highlight the need to use reliable approaches to precisely evaluate the effects of infrastructure investments. Furthermore, well-being is favorably influenced by control variables including household business, education, and urbanization. Welfare, however, is adversely affected by the size of the home and the number of individuals residing there. These results underline the complexity of rural development and the need for more study to fully comprehend the intricate relationships between these factors.