Do Rural Roads Create Pathways out of Poverty? Evidence from India

Abstract: This paper studies the impact of road provision on investments in physical and human capital in rural areas. The context is a large scale road construction program in rural India. Using data from household surveys and agricultural markets, the paper provides 2 main pieces of reduced form evidence. First, beneficiary farmers were more likely to adopt new technologies, such as chemical fertilizer and hybrid seeds. Second, teenaged children were more likely to drop out of school and join the labor force. I argue that these changes stemmed from altered relative prices, as there is evidence of reduced price dispersion in areas that got more roads. There is also evidence of changes in the household consumption mix.