When electrification increases, fertility declines

By Grace Segran

SMU Office of Research & Tech Transfer – What does fertility have to do with electricity, you might ask. Plenty, apparently. SMU Associate Professor of Economics Tomoki Fujii says it might sound strange at first, but if you think about it, conception typically does not take place under daylight, but under dim light or even no light. Hence, the relationship between fertility and electricity should not be surprising.

Professor Fujii, who recently published the paper “Fertility and Rural Electrification in Bangladesh” in the Journal of Development Economics, says that the earliest writing that hints at the existence of such a relationship was a New York Times article published on August 10, 1966 by Martin Tolchin. It reported the rise in births nine months after power failure.

“The relationship between fertility and electricity has been studied by demographers since the 1970s,” Professor Fujii says. “So, the topic itself is not new, though not much has been done until recently. Unlike earlier studies, recent studies by economists take causal inference seriously using modern econometric techniques.”

Professor Fujii, together with Abu Shonchoy at Florida International University, found that the impact of electrification on fertility is negative yet economically and statistically significant. The study’s findings underscore the importance of examining a broad and long-term impact of rural electrification and, possibly, other infrastructure interventions.

Economic importance

Professor Fujii, whose primary interests lie in Development Economics and Environmental Economics, tells the Office of Research and Tech Transfer that the possible link between fertility and electrification is important, especially for developing countries.

“High fertility rates are associated with undesirable outcomes such as underinvestment in human capital. In turn, this may result in low quality human resources and unemployment,” he argues. “In development literature, high fertility is regarded as one of the most important factors impeding long-term economic development. While fertility rates have generally declined around the world, some countries continue to have comparatively large fertility rates.”

According to Professor Fujii, previous studies tend to find that increased access to electrification can lead to reduction in fertility, but there are exceptions. “We wanted to be able to explain the mechanism of fertility reduction and the use of a simple formal model helped us achieve this. Indeed, our model clearly shows what parameters could change this conclusion. This is a whole new finding.”

Unique elements

There are a few points that are unique to the study. First, unlike existing studies on fertility and electrification, the researchers study rural electrification, which is essentially a permanent change, instead of power outages, which are simply temporary shocks.

Second, they have an economic model of household that provides a prediction about how consumption and time-use behaviour change in response to electrification. “No other study has such a feature,” says Professor Fujii.

Third, the researchers use two kinds of household-level panel data. One is contemporaneous panel data, i.e. data collected from the same household multiple times - twice in this case. The other is a retrospective panel, which is constructed from current observation retrospectively.

“The use of panel data is rare on the current topic, and the simultaneous use of both contemporary and retrospective panel data is unique to this study,” explains Professor Fujii. “Together with various other techniques and checks detailed in the study, we make our empirical analysis more credible than previous studies.”

Additional factor

The researchers also provide some indicative evidence that the reduction in fertility is due to an increase in watching TV. This is among the first studies to provide such evidence using household-level data.

“Bangladesh has TV programmes that provide information about maternal and child health, highlighting the importance of good hygiene practices and family planning. So, information of this sort could lead to reduction in fertility and improvement in children’s nutritional status,” Professor Fujii clarifies.  “Besides, TV could serve as an alternative form of entertainment.”

The finding that TV ownership lowered fertility is broadly consistent with previous studies such as Ferrara et al. (2012), Grimm et al. (2015), and Jensen and Oster (2009). Even though TV is not explicitly modelled, the finding is also consistent with the study’s theoretical model whereby people living in electrified households may spend more time watching TV instead of child-related activities, versus those in non-electrified households.

Data and findings

The research was carried out in Bangladesh. Professor Fujii avers that it is the right country to study the subject: “Bangladesh has an ambitious plan to increase access to electricity. Between 1997 and 2017, the proportion of people with access to electricity quadrupled from 22 percent to 88 percent, and it is set to achieve close to 100 percent in the near future. Clearly, rural electrification is an important and relevant topic in Bangladesh.”

The researchers visited Bangladesh and convinced high-ranking government officials of the importance of having a broader perspective and putting the existing data to good use. They were then able to obtain data from the Bangladesh Rural Electrification Board.

The data are analysed using a technique called difference-in-differences estimation. In its simplest form, the change in the number of children between the two periods in the panel data is compared between households that are electrified and not electrified at the baseline. This allows them to eliminate the effect of time trend that would have existed even in the absence of rural electrification.

“We found that rural electrification led to a reduction in fertility by about 0.2 children over the five-year period between 2005 and 2010,” says Professor Fujii. “This translates into a reduction of the total fertility rate – the number of children a woman is expected to give birth to during the course of her reproductive period – by 1.2. This is tantamount to more than half of observed reduction in fertility in Bangladesh in the same period.”

Practical implications

 Professor Fujii says that the study suggests that policy makers need to look at things broadly. “For example, if you want to promote family planning, the best policy may not necessarily be traditional family planning campaigns or distribution of free condoms but policies to improve access to electricity or TV.”

“This change in perspective is potentially beneficial to other developing countries as well,” he adds. “While one always needs to be cautious when extrapolating the results from other countries, it is worth seriously asking whether one should invest money in potentially fruitless traditional family planning campaigns, or put money somewhere else that is worth spending money on and comes with fertility reduction as a by-product.”

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