The Mining Industry in Sub-Saharan Africa: Impacts on Employment, Migration and Remittances

Abstract

This doctoral dissertation establishes a comprehensive overview of the impacts of the mining industry in Sub-Saharan in three different sectors: gender-specific effects on employment, change in subnational migration flows and subsequent impacts on households’ welfare, and finally, the effects of remittances sent from mining regions on recipient households’ expenditures. Chapter 1 analyzes whether the mining industry has gender-specific labor allocation effects in local mining communities. I leverage spatial and temporal variation in mines location and production in 29 Sub-Saharan countries. Women are found to leave the labor market after a mine opens nearby, but that effect is mitigated by a small increase in employment in supporting services. Inversely, men are able to increase overall labor supply, mainly in skilled and unskilled manual labor. However, mining policies recently implemented by producing countries, such as Minerals Development Funds, have the ability to mitigate the negative impacts on women’s employment thanks to the reinvestment of royalties in the local community. Finally, I use the gold mining industry of Ghana as a case study to measure the role of pollution on mines’ employment effects. I find that pollution accounts for 38% of the decrease in women’s agricultural employment after a mine opens but doesn’t significantly affect men. These negative labor effects could be overturned with effective environmental regulations. Chapter 2 estimates the change in households’ welfare and land prices in Ghanaian mining districts using both a theoretical and empirical model. In the former, I elaborate and calibrate a spatial general equilibrium model with spatial linkages in trade and migration to compute the change in welfare and agricultural land prices following a mine opening. This shock is represented by a shock in productivity, a change in the production function’s parameters and a reduction in migration costs. The latter two changes are calibrated using households census, roads maps, and microenterprise surveys from Ghana. Following a mining shock, welfare increases by 1.3% on average in treated districts thanks to an increase in wages, which mitigates the spike of 11.5% in land rental rates. The empirical model, building on spatial and temporal variation in mining activity and an instrumental variable strategy, supports these findings. Finally, results indicate a significant change in indirect utility and land rental rates up to 200kms from the treated district and shed a new light on the mechanisms through which a mining boom can spread to nearby regions. Chapter 3 takes a fresh look at the long-standing debate on the effects of remittances on households’ welfare using Ghana as a case study. More specifically, this chapter studies the differential impacts on households’ expenditures of two different types of remittances: remittances sent from mining regions of Ghana and those sent from abroad. Thanks to two different instrumental variable strategies, I am able to show that both types of remittances appear to alleviate the budget constraint of poorer households located in the lower quartiles of income distribution. In fact, they increase their total expenditures but also the fraction of expenses spent on education, food and non-food items. On the opposite, richer households who receive remittances do not reallocate expenditures, indicating non-binding budget constraints. I also analyze how domestic shocks alter these patterns. First, following a negative shock in gold prices (which might signal higher volatility in mining regions’ revenue), mining remittances receiving households will smooth their consumption by reducing the increase in education and non-food items expenditures. On the other hand, following a national currency appreciation, international remittances receiving households will be able to significantly increase their total expenditures and experience lower food burden compared to other households. Thus, households receiving international remittances seem to be better protected against negative economic shocks as they are able to mitigate any negative effects on their expenditures, contrary to households receiving remittances from mining regions.