On the Road to a Better Life? Rural Road and Economic Development in Albania

Abstract This study evaluates the impact of investment in rural roads on household welfare in Albania using a difference-in-differences method. We find that treated households experienced a 35-percentage point increase in the road quality and reduced travel times to the nearest motorable roads. Land and housing values rose significantly, and household heads were less likely to be unemployed, with a shift toward self-employment. While household income did not change significantly, consumption—particularly on non-food items—increased. These findings highlight the welfare-enhancing effects of improved connectivity and suggest that rural infrastructure investments can promote local economic activity. Policymakers should consider pairing road upgrades with complementary interventions, such as access to credit or small enterprise support, to maximize long-term gains.