On the inclusiveness of rural road improvement: Evidence from Morocco

This paper explores the heterogeneous impact of a rural road improvement project on the economic activities and living standards of households in Morocco. Road pavement improvements are expected to promote better market access, encourage the transformation of traditional agricultural activities, and create opportunities for new economic activities. However, benefits may not extend evenly across different groups, and the distributional consequences call for careful empirical investigation. We employ a difference-in-differences (DID) estimation using a household-level panel dataset collected under a quasi-experimental setting in the 2010s. We classify households into three groups based on asset holdings (rich, middle, and poor). We provide several new findings. First, there was no significant transformation of agricultural production or sales for all groups. Second, rich households increased hired agricultural labor and began paid employment while middle households started new family businesses. Poor households, however, did not enjoy these new employment opportunities except for a marginal increase in family businesses. Third, due to shifts in employment, the rural road renewal project improved household consumption 3%–4% annually for rich and middle households, an impact not clearly seen among poor households. Thus, our findings show that the economic benefits of rural road improvement might not be well-inclusive.