China's electrification and rural labor: Analysis with fuzzy regression discontinuity

Abstract

This article exploits the exogenous shock of China's Rural Primary Electrification program at the county-level to understand how electrification may impact rural arears in terms of labor supply. The fuzzy regression discontinuity method is employed to address the endogeneity problem of the electrification assignment and to identify treatment effects. The results show that the assignment of the electrification treatment can be efficiently identified by whether the amount of pretreatment electricity consumption level fell below a cutoff value. Moreover, over the program's disbursement period from 1991 to 2000, electrification has had measurable and positive impact on labor supply and electricity consumption of the rural households. There is also evidence that electrification has negative effect on the long-term employment growth in the rural areas of the recipient counties. The article concludes the positive effect of electrification on labor supply is hard to translate into a positive effect on rural employment, in the absence of rural enterprises development.