Effect of Infrastructure Development on Income Generation: A Study on Jamuna Bridge Project in Bangladesh

Abstract

This research is an attempt to examine the impact of infrastructure development on income generation in the north eastern region of Bangladesh which enjoyed a wide range of amenities after the construction of Jamuna Bridge in 1998. The application of 'difference in difference estimator' using the pooled household level income data of the treatment and control area in the pre and post time period of the project is the methodology of this research. The 4 districts situated nearer to the project location at the North eastern region of Bangladesh have been regarded as treatment area while the 4 districts of the Barisal division, the southern part of the country have been treated as control area. The household data of 1995 and 2005 have been used in this research. Regression models using dummy variables, interaction terms and some control variables-land, household size and age exhibit that the infrastructure impact on income of the project area ranges from 7.7-10% with statistical significance in the 1995-2005. The positive and decreasing rate of impact of control variables on income going in tune with the postulation of positive and diminishing marginal productivity of capital and labor in the production function has made the regression estimations more realistic and spontaneous.