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Flip the Switch: The Spatial Impact of the Rural Electrification Administration 1935-1940

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  • Carl Kitchens
  • Price Fishback

Abstract

To isolate the impact of access to electricity on local economies, we examine the impact of the Rural Electrification Administration low-interest loans in the 1930s. The REA provided loans to cooperatives to lay distribution lines to farms and aid in wiring homes. Consequently, the number of rural farm homes electrified doubled in the United States within 5 years. We develop a panel data set for the 1930s and use changes within counties over time to identify the effect of the REA loans on a wide range of socio-economic measures. The REA loans contributed significantly to increases in crop output and crop productivity and helped stave off declines in overall farm output, productivity, and land values, but had much smaller effects on nonagricultural parts of the economy. The ex-ante subsidy from the low interest loans was large, but after the program was completed, nearly all of the loans were fully repaid, and the ultimate cost to the taxpayer was relatively low.

Suggested Citation

  • Carl Kitchens & Price Fishback, 2013. "Flip the Switch: The Spatial Impact of the Rural Electrification Administration 1935-1940," NBER Working Papers 19743, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:19743
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    References listed on IDEAS

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    1. Rural Electrification Administration, 1939. "A Guide for Members of REA Cooperatives," USDA Miscellaneous 319867, United States Department of Agriculture.
    2. Taryn Dinkelman, 2011. "The Effects of Rural Electrification on Employment: New Evidence from South Africa," American Economic Review, American Economic Association, vol. 101(7), pages 3078-3108, December.
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    7. Fishback, Price V. & Horrace, William C. & Kantor, Shawn, 2005. "Did New Deal Grant Programs Stimulate Local Economies? A Study of Federal Grants and Retail Sales During the Great Depression," The Journal of Economic History, Cambridge University Press, vol. 65(1), pages 36-71, March.
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    9. repec:oup:qjecon:v:129:y:2013:i:1:p:275-331 is not listed on IDEAS
    10. Todd C. Neumann & Jason E. Taylor & Price Fishback, 2013. "Comparisons of Weekly Hours over the Past Century and the Importance of Work-Sharing Policies in the 1930s," American Economic Review, American Economic Association, vol. 103(3), pages 105-110, May.
    11. Kitchens, Carl, 2014. "The Role of Publicly Provided Electricity in Economic Development: The Experience of the Tennessee Valley Authority, 1929–1955," The Journal of Economic History, Cambridge University Press, vol. 74(2), pages 389-419, June.
    12. Richard Hornbeck & Pinar Keskin, 2015. "Does Agriculture Generate Local Economic Spillovers? Short-Run and Long-Run Evidence from the Ogallala Aquifer," American Economic Journal: Economic Policy, American Economic Association, vol. 7(2), pages 192-213, May.
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    Cited by:

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    2. Fremstad, Anders & Paul, Mark, 2022. "Neoliberalism and climate change: How the free-market myth has prevented climate action," Ecological Economics, Elsevier, vol. 197(C).
    3. Lee, Kenneth & Brewer, Eric & Christiano, Carson & Meyo, Francis & Miguel, Edward & Podolsky, Matthew & Rosa, Javier & Wolfram, Catherine, 2016. "Electrification for “Under Grid” households in Rural Kenya," Development Engineering, Elsevier, vol. 1(C), pages 26-35.
    4. Hrozencik, R. Aaron, 2018. "Energy, Food, and Water; Electricity Cooperative Pricing and Groundwater Irrigation Decisions," 2018 Annual Meeting, August 5-7, Washington, D.C. 274322, Agricultural and Applied Economics Association.
    5. Clay, Karen & Lewis, Joshua & Severnini, Edson R., 2016. "Canary in a Coal Mine: Infant Mortality, Property Values, and Tradeoffs Associated with Mid-20th Century Air Pollution," IZA Discussion Papers 9884, Institute of Labor Economics (IZA).
    6. Kenneth Lee & Eric Brewer & Carson Christiano & Francis Meyo & Edward Miguel & Matthew Podolsky & Javier Rosa & Catherine Wolfram, 2014. "Barriers to Electrification for "Under Grid" Households in Rural Kenya," NBER Working Papers 20327, National Bureau of Economic Research, Inc.

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    JEL classification:

    • N12 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - U.S.; Canada: 1913-
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy

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