Rural Electrification and Household Labor Supply: Evidence from Nigeria

• We examine how rural electrification impacts the labor supply in Nigerian couples.
• We test for the exogeneity of electrification.
• We test for the dependence between spouses’ decisions with a recent bivariate model.
• This dependence is critical to consider when assessing the impact of electricity.
• Electrification increases husbands’ working time without altering that of wives.

SummaryIn Nigeria, the most populated African country, rural electrification is a critical issue because of the low household electrification rate and the poor quality of the grid. This energy poverty has harmful economic and social consequences in rural areas, such as low productivity, lack of income-generating opportunities and poor housing conditions.In this paper, we consider electrification as a technical shock that may affect household time allocation. Using the 2010–11 General Household Survey, we investigate how electrification affects female and male labor supply decisions within rural households in Nigeria. Focusing on husband–wife data, we consider potential dependence in spouses’ labor supply decisions and address the challenge of zero hours of work using a recent copula-based bivariate hurdle model (Deb et al., 2013). In addition, an instrumental variable strategy helps identify the causal effect of electrification.Our results underline that this dependence in spouses’ labor supply decisions is critical to consider when assessing the impact of electrification on these outcomes. Electrification increases the working time of both spouses in the separate assessments, but the joint analysis emphasizes only a positive effect of electrification on husbands’ working time. In line with the household labor supply approach, our findings highlight that, within the household, the labor supply decisions of one spouse significantly affect those of the other spouse. Thus, if we neglect the effect of electrification on the spouse of the individual examined, we may fail to assess how this individual has been actually affected by this common shock on both spouses. Our results suggest that these within–household relationships promote husbands’ working time at the expense of wives’ working time.