Impacts of access to electricity on employment and household income growth in Cambodia

Abstract

This study examines the impacts of access to electricity on household welfare in terms of employment and income growth in Cambodia. To correct for the endogeneity of electricity, we introduce two instruments: (1) population density at village level; and (2) distance between the center of the village and the nearest electricity substation point. Results show a strong and positive effect of household access to electricity on the probability of participation in wage employment and self-employment in the nonfarm sector. Access to electricity contributes to total household income growth through the growth of household nonfarm income. Evidence shows that electrification has facilitated the shift of household livelihood away from self-employment on farms and to wage work in the nonfarm sector, which eventually served as the main driver of household income growth.

JEL classification: J21, O13, Q4