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How Do Electricity Shortages Affect Productivity? Evidence from India
June 17, 2015Poverty and Applied Microeconomics Seminar Series

Stephen D. O'Connell will present the results of recent research.

Speaker: Stephen D. O'Connell is Chancellor's Fellow and Ph.D. student at City University of New York Graduate Center and a consultant to the World Bank. 

Abstract: We estimate the effects of electricity shortages on Indian manufacturers, instrumenting with supply shifts from hydroelectric power availability and power plant construction. We estimate that India’s average reported level of shortages reduces the average plant’s revenues and producer surplus by five to ten percent, but average productivity losses are significantly smaller because most inputs can be stored during outages. Shortages distort the plant size distribution, as there are significant economies of scale in generator costs and shortages more severely affect plants without generators. Simulations show that offering interruptible retail electricity contracts could substantially reduce the impacts of shortages.


Last Updated: Jun 11, 2015

The Poverty and Applied Micro Seminar Series is a weekly series hosted by the World Bank's research department. The series invites leading researchers in applied microeconomics from the fields of poverty, human development and public service delivery, agriculture and rural development, political economy, behavioral economics, private sector development, and a range of other fields to present the results of their most recent research in a seminar format. The full list of seminars can be viewed here.

Event Details
  • Date: June 17, 2015
  • Location: World Bank Headquarters, MC3-570
  • Time: 12:30 - 2:00 p.m.
  • CONTACT: Anna Bonfield
  • abonfield@worldbank.org