Rural Electrification, Agricultural Transformation, and Distributional Change

Rural electrification is usually studied as a bridge to nonfarm employment and manufacturing growth. This paper studies a different and historically central margin: how the arrival of reliable rural power changes agricultural production, rural industrial activity, and the distribution of gains across places. I use China's Rural Primary Electrification Program as a staggered natural experiment. Counties entered certified cohorts in 1990, 1995, and 2000; the analysis combines a 1981-2015 county panel from the county-level agricultural database with climate, terrain, baseline economic conditions, and poverty-status controls. The empirical strategy is a twostage difference-in-differences estimator that residualizes outcomes with county fixed effects, year fixed effects, and province-year shocks before estimating treatment effects with countyclustered standard errors. Electrification increased agricultural machinery power by 11.9 percent, fertilizer use by 11.1 percent, effective irrigated area by 4.8 percent, total sown area by 6.4 percent, grain sown area by 7.8 percent, and agricultural labor by 9.5 percent. These input and scale margins translate into an 8.2 percent increase in grain output, a 7.9 percent increase in aggregate agricultural output value, and a 6.8 percent increase in agricultural income; rural industrial output value also rises by 10.8 percent. The estimates do not show robust effects on grain yield, plastic film use, cultivated land stock, aggregate farmer income, township-enterprise employment, or industrial income. Heterogeneity by baseline county income shows a progressive pattern: the lowest-income counties gain 22.4 percent in agricultural income, far more than richer counties. Event-study evidence supports the identifying assumption for major production and income outcomes and shows that the effects build gradually after certification. The results suggest that early electrification in poor agrarian settings is not merely an industrial policy. It is a general-purpose rural technology that relaxes production constraints, expands the cultivated margin, and can narrow spatial inequality when targeted toward lagging counties.