Fracking, Farmers, and Rural Electrification in India

What makes electrification “work” in some areas and not in others? We combine two natural experiments to highlight how complementary conditions lead to large differences in the impacts of a large rural electrification program. The shale gas revolution in the United States induced an unprecedented commodity boom across northwestern India. Leveraging population-based discontinuities in the contemporaneous roll-out of India’s national rural electrification scheme, we show that access to electricity increased total employment and nonagricultural employment in villages affected by this exogenous economic shock, but had no impact on labor markets elsewhere. Our analysis highlights how complementary economic conditions lead to large differences in the labor-market impacts of rural electrification. It also helps explain the large variation in the reported impacts of such resource-intensive infrastructure investments globally.