Short- and long-run impacts of rural electrification: Evidence from the historical rollout of the U.S. power grid

Abstract

Electrification among American farm households increased from less than 10 percent to nearly 100 percent over a three decade span, 1930–1960. We exploit the historical rollout of the U.S. power grid to study the short- and long-run impacts of rural electrification on local economies. In the short-run, rural electrification led to increases in agricultural employment, rural farm population, and rural property values, but there was little impact on the local non-agriculture economy. Benefits exceeded historical costs, even in rural areas with low population density. As for the long run, rural counties that gained early access to electricity experienced increased economic growth that persisted for decades after the country was fully electrified. In remote rural areas, local development was driven by an expansion in the agricultural sector. Meanwhile in rural counties near metropolitan areas, long-run population growth coincided with increases in housing costs and decreases in agricultural employment, suggesting that rural electrification stimulated suburban expansion.