LT week 6 Flashcards
Energy and growth
Ways electricity is important aside from these papers
Increased access to grid electricity may bring benefits to citizens in the developing world. But what costs might be associated with increased access?
Motivation
Demand for Electricity on the Global Electrification Frontier (Burgess et al., 2023)
To estimate the demand for all electricity sources for rural areas when facing rapid electrification.
Special settings
Demand for Electricity on the Global Electrification Frontier (Burgess et al., 2023)
“Global electrification frontier is collcetion of places where households are getting electricity for first time (US from 1935; Brazil from 1960s); inseperable from economic growth
Billion people in South Asia and sub-Saharan Africa remain without elecricity
Rapid growth of solar panels can supply off the grid, supporting rural households –> off-grid power has skyrocketed”
Theory
Demand for Electricity on the Global Electrification Frontier (Burgess et al., 2023)
“Households choose between 4 electricity sources and an outside option of no electricity
Allow for differences in household and source characteristics using a household panel survey
Allow for unobserved variation in household preferences and quality of electricity sources across villages and time (helps show rapid changes in new goods)”
Empirical design
Demand for Electricity on the Global Electrification Frontier (Burgess et al., 2023)
“Randomised experiment introducing new product (solar microgrids) and varied its price across 100 village-level markets for 2.5 years
Then use experimental variation in price to estimate discrete choice demand model; availability is extraordinarily rare and removes reliance on traditional assumption about market conduct or structure of demand shocks to generate instrumental variables
Experimental variation necessary for unbiased and precise estimates of the PED
Experiment varies price over multi-year period, which lessens external validity concerns that arise with very short-run discounts”
Data
Demand for Electricity on the Global Electrification Frontier (Burgess et al., 2023)
“Sample consists of 100 villages in two districts in Bihar, sampled from broader population with poor access to electricity at baseline
Collect data from demand and supply sides of market over 4 year period
- Demand: 1) household-level panel survey on sources and uses of electricity
- Supply: 1) household-level administrative data on customer enrollement and payments for solar microgrid connections; 2) village-level survey data from operators of common diesal generators (off-grid source); 3) household-level administrative data from state utility on customer billing and payments as well as village-level electricity supply
Sample representing those with interest in microgrid solar connecton, essentially becoming nearly representative of whole population
Surveys before, during, after”“Households fluidly substitute between alternative sources
Increases in energy access increased household surplus from electrification by 5x (both by off-grid and grid sources); however, when available and subsidised, people prefer grid
As households become wealthier, future growth in electrification will come from grid as this is preferred, even if there’s a projected fall in price of solar
Households choices are dependent on national energy policies as it defines the hours of supply/price of grid; pushes rural populations to rely on off-grid methods (explaining rise in solar and unwillingess to pay for grid connection in some African studies)
When quality and extent of grid improve, reliance on off-grid falls away; will remain key and growing source of electricity as solar prices fall when governments are unwilling”
Key findings
Demand for Electricity on the Global Electrification Frontier (Burgess et al., 2023)
“Households fluidly substitute between alternative sources
Increases in energy access increased household surplus from electrification by 5x (both by off-grid and grid sources); however, when available and subsidised, people prefer grid
As households become wealthier, future growth in electrification will come from grid as this is preferred, even if there’s a projected fall in price of solar
Households choices are dependent on national energy policies as it defines the hours of supply/price of grid; pushes rural populations to rely on off-grid methods (explaining rise in solar and unwillingess to pay for grid connection in some African studies)
When quality and extent of grid improve, reliance on off-grid falls away; will remain key and growing source of electricity as solar prices fall when governments are unwilling”
Interpretation / policy implications
Demand for Electricity on the Global Electrification Frontier (Burgess et al., 2023)
Growth of grid is dependent on country’s willingess to subsidise to achieve grid electrification
Motivation
The Effects of Rural Electrification on Employment: New Evidence from South Africa (Dinkelman, 2011)
To estimate the impact of electrification on employment growth by analysing South Africa’s mass roll-out of electricity to rural households.
Special settings
The Effects of Rural Electrification on Employment: New Evidence from South Africa (Dinkelman, 2011)
“Little understanding of the direct effects that new access to modern energy infra will have on process of development
Rapid spreading of grid infrastructure in South Africa post-Apartheid”
Theory
The Effects of Rural Electrification on Employment: New Evidence from South Africa (Dinkelman, 2011)
“Estimate causal impact of household electrification on employment growth in rural communities by analysing rural electrification roll-out in postapartheid South Africa
Investigate mechanisms this affects rural labour markets
Risk of selection bias given infra can be targeted towards growing areas”
Empirical design
The Effects of Rural Electrification on Employment: New Evidence from South Africa (Dinkelman, 2011)
“Approach 1: estimate community-level employment growth rates in communities that do and don’t receive an electicity project 1996-2001, instrumenting for project placement
* - Collect and match administrative data on roll-out in rural KZN with geographical data and 2 census surveys
* - Use land gradient to generate exogenous variation in electricity project allocation to communities (given hilly areas are more difficult to get grid access to)
* - Higher gradient raises average cost of household connection, making gradient an important factor in prioritising areas for electrification
* - Placebo experiment for KZN, an area with poor agricultural prospects, gradient is unlikely to directly affect employment outcomes conditional on covariates
Approach 2: fixed effects strategy to estimate impact of electrification on richer set of labour market outcomes (employment, hours of work, wages, earnings)
* - Construct 4-period panel of magisterial districts from cross-sectional household survey data in 1995-2001 and address non-random project placement and confounding economic trends by controlling for magisterial district fixed effects and trends
* - Estimates labour maket effects of electrification using only within-district variation in electrification”
Data
The Effects of Rural Electrification on Employment: New Evidence from South Africa (Dinkelman, 2011)
“Panel dataset of community aggregate variables from 1996 and 2001 census
Add spatial data on electrification at baseline (1996); administrative data on project placement (1990-2007); measures of geography at baseline (community land gradient, distances between communities and nearest electricty substation)
Second emperical strategy uses individual-level data on employment (hours, wages, earnings) and household fuel sources from household surveys and LFS”
Key findings
The Effects of Rural Electrification on Employment: New Evidence from South Africa (Dinkelman, 2011)
- female employment increases
- home production time falls
- Not Just Migration
“Emplyoment in rural KZN increases in wake of electrification
* - Female employment raises by 9% –> 15k more women participating in labour force
* Fixed effects analysis supports results although inference is difficult given the small samples in dataset
* Increases employment for those on the margin for women; women work 8.9 hours more per week
* Male employment rises but insignificantly, shows electrification did not spark large increases in demand for labour through rural industrialisation
Mechanisms increasing rural employment
* Electrification on home production activities, using labour-saving technology, releasing female time from home to market work
* Rule out scope that electrification stimulates rural industrialisation, hence a shift in labour demand; shown through absence of cross-community employment spillovers
* May have lowered cost of producing home-based services for maket, creating self-employment
* Migration analysis shows people may be induced to stay in or move towards areas where infrastructure is rolling out, but nothing significant
* Likely to be impacts beyond relasing time from home production but lack data”
Interpretation / policy implications
The Effects of Rural Electrification on Employment: New Evidence from South Africa (Dinkelman, 2011)
“Electrification enables rural populations to increase participation in modern labour markets
- Any infra project should consider employment effects alongside direct effects on welfare (income, health, education)
- Effects of infra project should consider the current context of the economy (i.e. end of apartheid in South Africa)
- Despite biases, it is possible to shed light on effects by combining results from different empirical approaches”
In order to study the impact of electrification
As a source of identification, we could:
* Exploit the timing of electrification
* Exploit rules which determine which villages get electrified when
* Conduct some difference-in-difference estimation for villages across the Bihar borader
Data you would need:
* Household + community level outcomes (such as?) Firm outcomes
* Demographic changes following electrification Spatial changes e.g. urban build up or agglomeration
