Rural electrification, migration and structural transformation: Evidence from Ethiopia

Abstract

To what extent does rural electrification induce structural change and alter migration patterns? This paper addresses this question using a simple multi-sector spatial model and evidence from a panel of rural Ethiopian villages during its recent expansion of electricity supply. We find that electrification raised irrigation rates, agricultural yields and non-agricultural business activity. Furthermore, electrified villages experienced higher rates of in-migration and lower rates of out-migration. Each of these predictions is qualitatively consistent with the predictions of our model. Our results suggest that rural electrification helped facilitate structural transformation of villages economies in Ethiopia and slowed out-migration from rural areas.