Abstract: We study the effect of railroads, the single largest public investment in colonial India, on human capital. Using district-level data on literacy, we find railroads had positive effects on literacy, in particular on male and English literacy. We employ two identification strategies. First, we exploit synthetic panel variation contained in cohort-specific literacy rates due to differences in the timing of railroad exposure of different cohorts within the same district and census year. We find a one standard deviation increase in railroad exposure raises literacy by 0.29 standard deviations. Second, we use distance from military cantonments and an early railway plan as instruments for district railway exposure in the cross section and find similar results. We show that railroads increased literacy by raising secondary and elite primary, rather than vernacular primary, schooling. Our mediation analysis suggests that non-agricultural income, urbanisation, and opportunities for skilled employment are important mechanisms, while agricultural income is not.
Read the paper: Did Railways Affect Literacy? Evidence from India
