Flip the Switch: The Spatial Impact of the Rural Electrification Administration 1935-1940

50 Pages Posted: 20 Dec 2013 Last revised: 13 Jun 2021

See all articles by Carl Kitchens

Carl Kitchens

University of Mississippi - Department of Economics; National Bureau of Economic Research (NBER)

Price V. Fishback

University of Arizona; National Bureau of Economic Research (NBER)

Date Written: December 2013

Abstract

To isolate the impact of access to electricity on local economies, we examine the impact of the Rural Electrification Administration low-interest loans in the 1930s. The REA provided loans to cooperatives to lay distribution lines to farms and aid in wiring homes. Consequently, the number of rural farm homes electrified doubled in the United States within 5 years. We develop a panel data set for the 1930s and use changes within counties over time to identify the effect of the REA loans on a wide range of socio-economic measures. The REA loans contributed significantly to increases in crop output and crop productivity and helped stave off declines in overall farm output, productivity, and land values, but had much smaller effects on nonagricultural parts of the economy. The ex-ante subsidy from the low interest loans was large, but after the program was completed, nearly all of the loans were fully repaid, and the ultimate cost to the taxpayer was relatively low.

Suggested Citation

Kitchens, Carl and Fishback, Price V., Flip the Switch: The Spatial Impact of the Rural Electrification Administration 1935-1940 (December 2013). NBER Working Paper No. w19743, Available at SSRN: https://ssrn.com/abstract=2370199

Carl Kitchens (Contact Author)

University of Mississippi - Department of Economics ( email )

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University, MS 38677
United States

HOME PAGE: http://www.carlkitchens.com

National Bureau of Economic Research (NBER) ( email )

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Price V. Fishback

University of Arizona ( email )

Tucson, AZ 85721-0108
United States
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520-621-8450 (Fax)

National Bureau of Economic Research (NBER)

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United States

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