Rural Roads, Climate Change, and the Dynamics of Structural Transformation: Evidence from India

Aparajita Dasgupta and Devvrat Raghav ()
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Devvrat Raghav: University of Virginia

No 122, Working Papers from Ashoka University, Department of Economics

Abstract: How does access to infrastructure mediate the processes of structural transformation in the presence of climate shocks? By exploiting a large-scale rural road construction program in India, we ask whether rural road connectivity can preserve the gains from structural transformation in emerging markets. In comparison to the existing literature, we provide a newer framework to study the effects of road infrastructure access in mitigating the impact of climate shocks on structural transformation. The program roll out criteria allows us to employ a fuzzy difference-in-discontinuity design to provide the first line of causal evidence in this area. Overall, we find a mixed effect of rural road connectivity on agricultural participation. Interestingly, we find that while road connectivity enables exits from farm labour it also raises the share of households in cultivation. Importantly, while temperature shocks drive down local demand, this effect is somewhat counteracted by access to paved roads. Our results suggest the role of rural infrastructure policies in alleviating the burden of rising temperature, which has first order policy relevance in the context of designing policy instruments to tackle long-term climate change, not just within the country but for all rural regions across the developing world.

Keywords: Climate; Shocks; India; Infrastructure; Labour; markets; Road; access (search for similar items in EconPapers)
Pages: 46
Date: 2024-08-31
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