Short-run impact of electricity on social capital: evidence from a rural electricity program

Abstract

AbstractAccess to electricity is increasing in developing nations, driven by the belief that it can enhance economic outcomes. However, beyond its economic impact, electricity availability can influence non-economic outcomes like social capital, especially in rural settings. Social capital plays a crucial role in promoting collective actions and improving the credibility of social contract, which can help alleviate market inefficiencies stemming from challenges in enforcing such agreements. This study investigates the impact of electricity on social capital, focusing on household-level trust, interactions and engagements. To overcome the potential endogeneity of electricity access, we estimate a bivariate probit model, using a plausibly exogenous land gradient as an instrument. Our findings suggest that, in the short run, the influence of electricity on various social capital measures is not statistically significant. However, we do find some evidence of a heterogeneous effect.