1. INTRODUCTIONBhutan is a low middle-income country (World Bank, 2014) with a total Gross Domestic Product (GDP) of $897.02 million in 2013 (National Statistics Bureau [NSB], 2014a). Due to its small population base of about 720,697 (NSB, 2013), per capita GDP is relatively higher compared to its neighbouring countries. Bhutan's per capita GDP is about $2,420 as compared to $1,913 of India, $840 of Bangladesh and $700 of Nepal in 2012 (World Bank, 2014). During the 10th Five Year Plan (FYP) period, which is from mid 2008 to mid 2013, Bhutan saw huge reduction in poverty from 23 percent in 2007 to 12 percent in 2012 (NSB, 2012) but poverty still remains a major concern for the government. As Bhutan is mostly an agrarian economy, poverty in Bhutan is mostly a rural phenomenon. Increasing rural income was one of the main objectives of the 10th FYP activities. The goal was to enhance mean rural household income to Nu. 35,000 per year in local currency unit Ngultrum (Gross National Happiness Commission [GNHC], 2009).Bhutan is a mountainous country, making road networking a very challenging task. Rural poverty in Bhutan is mostly associated with inadequate access to markets, among many other factors (GNHC, 2009, Road connectivity is essential in a landlocked country like Bhutan for development activities and in promoting domestic and international trade. Realising its importance, government of Bhutan felt the need to upgrade and improve transport infrastructure in the country. Therefore, another important target in the 10th FYP was also to ensure that three fourths of the rural population lives less than half a day's walk from the nearest road-head. The target was aimed to achieve through various activities such as construction of thousands of kilometers of feeder roads, building of national highways and district roads (GNHC, 2009, p.43). As of 2013, total length of roads in Bhutan is 10,578.3 Kilometers (kms) connecting all the 20 districts in the country (NSB, 2014b). Non-black topped roads with a total length of 7,602.9 kms is more than double the length of the tarred or blacktopped roads of 2,975.3 kms (NSB, 2014b)The importance of road accessibility to promote social and economic development is well recorded in the past literatures. Using a semi parametric procedure in analysing the household level benefits from road projects, Jacoby (2000) finds that providing extensive road access to markets would give substantial benefits on average, much of these going to poor households in Nepal. Similarly, Fan and Chan-Kang (2004) finds that low quality roads which are mostly rural roads has the higher potential to contribute to the Gross Domestic Product (GDP) and alleviate rural and urban poor from poverty in China. However, the size of the market to which the road access is provided is found to be important. Access to small towns is found to have less benefits from road connectivity in Malaysia (Windle and Cramb, 1997). Contrarily, Hettige (2006) sees that rural roads are necessary but not a sufficient condition for graduating poor households from poverty in Indonesia, Philippines and Sri Lanka. It is believed that household asset base determines the use of road.However, the previous studies are mostly concerned with the impact of road accessibility to social and economic growth at a point in time. The current study proposes to measure the effect of a policy, which is providing increased road accessibility on household wealth in rural Bhutan. In doing so, this study adopts a difference in difference (DiD) approach to see if road connectivity has increased wealth in the country during the 10th FYP development phase. Many of the studies that employ DiD approach is based on panel data. Pooled cross section data are very rarely studied and more so, using national level data is very sparse. To the best knowledge of the author, it is only Kiel and McClain (1995) that used pooled cross section data to study the effect of new garbage incinerator on housing values in North Andover, Massachusetts. …