The distributional effects of rural electrification on household welfare: Evidence from Senegal

This study uses a cross-sectional dataset of 3215 rural Senegalese households from the 2018/19 Harmonized Survey on Households Living Standards to assess the distributional household welfare effects of electricity access. The paper conducts separate analyses for both on-grid and off-grid electricity access and uses an array of empirical strategies to compute the relevant effects. We find that household access to grid electricity is associated with increased food and non-food expenditures, while off-grid solar electricity is only associated with increased levels of the latter. In addition, access to grid electricity appears to impact household expenditures more than solar electricity, with the off-grid effect not detected at the top end of the non-food expenditure distribution. In contrast, on-grid electricity has a greater welfare impact on higher-income households. The results further suggest that access to solar electricity can reduce inequality in total non-food household expenditures more than on-grid electricity. The findings encourage consideration of policies designed to extend solar energy to the more remote rural areas to reduce inequality. • Propensity score matching and instrumental variable approach are used to identify the mean effects of electricity access. • The distributional effects of electricity access are summarized with unconditional Quantitative Treatment Effects (QTEs). • Electrified households have greater expenditure compared to non-electrified households. • Households with on-grid electricity have greater expenditure compared to the ones with off-grid electricity. • Non-food and food expenditure increased in households with on-grid electricity while the former expanded in the ones with solar electricity. • As a policy implication, the Government of Senegal must proceed with electrification using solar technologies in more remote rural areas.