Financing Road Projects and Its Impact on Off-Farm Work

Abstract Since 2003, China has revamped its rural road construction policy, transitioning from "workers self-organised construction (Min Gong Jian Qin)" to a "one project, one discussion (Yi Shi Yi Yi)" approach and significantly increasing government investment. This study evaluates the impact of various financing sources—externally funded, self-financed, and mix financed—on rural off-farm income and migration intentions using the Chinese Household Income Project survey data, employing difference-in-differences and propensity score matching methodologies to analyze the socioeconomic impacts of rural road projects financed through different sources on off-farm work income and migration intentions of the rural Chinese population. Findings reveal that externally funded road projects significantly enhance off-farm income and encourage migration intentions for work. Conversely, self-financed projects that rely on local villagers' contributions and voluntary labor, show no positive impact on off-farm income and unexpectedly reduce migration intentions. Importantly, projects with mixed financing models were found to have no significant impact on either off-farm income or migration patterns, highlighting challenges in the coordination and efficacy of these hybrid financing strategies. These findings underscore the importance of continued investment in rural transport infrastructure, with an emphasis on poverty reduction and rural out-migration through diverse financing models for road construction. This research provides insights for policymakers and stakeholders aiming to enhance rural infrastructure and development through informed transport policy initiatives. JEL codes: O18, J61, R42