African Mining, Gender and Local Employment

Abstract:

Access to employment improves women’s lives and is listed among the top five priorities for promoting gender equality in the 2012 World Development Report. This paper addresses this issue by exploring women’s labor market opportunities in Africa within one very important and growing sector: extractive industries.

Africa’s opportunities are being transformed by new discoveries of natural resources and their rising prices, and the mining sector is the main recipient of foreign direct investment in Sub-Saharan Africa. Whether the discovery of natural resources is a blessing or a curse to a country’s citizens is a contentious issue, and natural resource dependence has been linked to negative outcomes at the national level such as environmental degradation, conflict, elite capture of rents and low female labor force participation. Natural resource extraction has been argued to be a hindrance to women’s labor market participation by increasing reservation wages and by decreasing market demand for female labor. We perform the first cross-national study testing these hypotheses with micro-data. To do this we combine survey data on 500,000 women in Sub-Saharan Africa with geo-coded data on 900 large-scale mines (see Figure 1). We treat mine openings and mine closings as natural experiments to explore local labor market changes.

Industrial mines generate local structural shifts. Subsistence farming becomes less important for both men and women. However, men shift to skilled manual labor, and women shift to service sector jobs. This contradicts the hypothesis that natural resource extraction is detrimental to women, by not providing them with new job opportunities. However, in support of the hypothesis, women decrease their labor market participation more than men do. A back-of-the-envelope calculation estimates that 90,000 women across Africa benefit from service sector jobs as a direct result of industrial mining in their communities, but 280,000 women leave the labor force. Further evidence using exogenous changes in world prices of minerals show that effects are stronger in boom times, but that the labor market effects are temporary and disappear with mine closing. The effects are highly spatially concentrated, and individuals living 50km away from a mine are not affected by it.