Exploring the heterogeneous impact of road infrastructure on rural residents’ income: Evidence from nationwide panel data in China

Countries have invested in transport infrastructure and public service in recent years to reduce rural poverty and income inequality. However, the effects of transport infrastructure on the residents with economic and educational disadvantages in rural areas are still under debate. In this paper, we investigate the impact of road infrastructure on the income of rural residents at the municipal level using data from the China Family Panel Survey (CFPS) from 2010 to 2018. By using the instrumental variable regression model, we found that rural residents' household incomes benefit from road infrastructure. Within income components, road infrastructure plays a role in improving rural residents’ wage and business income. Further comparing different rural resident groups, we found that rural residents with lower initial farming and business income benefit more from improved road infrastructure in terms of their farming and business income from 2010 to 2018. In addition, in poverty-stricken areas, rural residents with lower initial farming and business income benefit more from road infrastructure in improving their farming and business income. However, the household incomes of rural residents with low formal education improve less as a result of road infrastructure. Policymakers should thus consider combining transport infrastructure provision with other policy packages, such as education program or skill training, to target different groups of rural residents in China.