Jobs! Electricity Shortages and Unemployment in Africa
This paper presents evidence on how the provision of unreliable electricity constrains expansion in the productive sectors of the economy, consequently leading to a reduction in the number of employment opportunities in Africa. Using geodata on ele...
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Format: | Working Paper |
Language: | English |
Published: |
World Bank, Washington, DC
2018
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Online Access: | http://documents.worldbank.org/curated/en/659751524142624281/Jobs-electricity-shortages-and-unemployment-in-Africa http://hdl.handle.net/10986/29717 |
Summary: | This paper presents evidence on how the
provision of unreliable electricity constrains expansion in
the productive sectors of the economy, consequently leading
to a reduction in the number of employment opportunities in
Africa. Using geodata on electricity transmission networks
on the continent, the paper computes an index that explores
spatial and time variations in technical losses in the
electricity network as an instrument for electricity
shortages. The instrument is combined with geo-referenced
data from the Afrobarometer and Enterprise Surveys from more
than 20 African countries to estimate the causal impact of
electricity shortages on employment, and the mechanisms
driving the impact. Results from the paper reveal that
electricity shortages exert a substantial negative impact on
employment rates in Africa. The evidence also shows three
channels by which electricity shortages affect labor market
participation. First, on the extensive margin, electricity
shortages constrain the creation of new businesses through
their negative effect on entrepreneurship. Second, in the
intensive margin, electricity shortages reduce the output
and productivity of existing firms, thereby causing them to
reduce labor demand. Third, electricity shortages act as a
distortion in the business climate, thereby reducing the
trade and export competitiveness of African firms. |
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