Electrification and Time Allocation:Experimental Evidence from Northern El Salvador

We implemented an experimental study to better understand how electrification affects the economic lives of rural households. By randomly allocating incentives to get a grid connection we generate exogenous variation in the probability that households connect to the grid, which we exploit to study the effects of electrification on time allocation. We find that electrification leads to (i) increased investment in education among school-age children, in the form of a 78 percent higher participation in activities related to education (e.g. time studying, time at school); and (ii) higher participation in income generating activities among adult women: electrification led to a 46 percentage point increase in participation in non farm employment and 25 percentage point higher probability of operating a home business. These are mostly home production activities that don't require large monetary investments or the participation of the male head. However, average profits from these activities are around $1,000 per year, suggesting that income increases due to electrification are potentially important.