Does Privatization Deliver? Access to Telephone Services and Household Income in Poor Rural Areas Using a Quasi-Natural Experiment for Peru

We take advantage of a quasi-natural experiment in Peru by which the privatized telecommunications company was required by government to randomly install and operate public pay phones on small rural towns along the national territory. Using a especially designed household survey for a representative sample of rural towns we are able to link access to telephone services with household income. We find, that regardless of the income measurement, most characteristics of public telephone are positively linked with income. Remarkably, the benefits are given at both non-farm and farm income levels. Not only do the findings hold when using instrumental variables but they are further confirmed when using propensity scores matching methods.