RUNNER-UP IN THE YOUNG SCHOLARS THINK PIECE SERIES, FIRST EDITION: EXTRACTIVE INDUSTRIES
This contribution is published as part of the Young Scholars Think Piece Series which aims to provide promising young researchers with an opportunity to present their research on social development and contribute to the diversity of ideas within the development community. The winning pieces have been selected for their alternative perspectives and the way they highlight marginalized viewpoints and bringing neglected issues to the fore.
is PhD candidate in Economics at the University of Gothenburg. She is currently a short-term consultant at the World Bank, and has recently been a visiting scholar at the University of California, Berkeley and at the University of Oxford.
African Mining, Gender and Local Employment
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 think piece addresses this issue by exploring women’s labour market opportunities within one very important and growing sector: extractive industries. Opportunities in Africa 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 conflict, elite capture of rents (see van der Ploeg, 2011 for an overview), and low female labour force participation (Ross, 2008).
While the country-level economic and political effects of extractive industries are well explored, the research on their local economic effects is nascent. Traditionally, it has been assumed that extractive industries have few or no economic linkages to the local economy in which they operate. This widely-held belief continues to inform policy on mineral mining in many parts of the world, despite the limited empirical evidence supporting it. One of the few empirical investigations available supporting this hypothesis, which examines the impact of one large mine in Peru, found that it was valid where there were no policies in place for local procurement of goods (Aragón and Rud, 2013), although whether this translates to a more general setting is not understood.
This think piece focuses on women’s labour market opportunities. According to current thinking, it is ambiguous whether industrial mining increases or decreases female employment. The “African Mining Vision”, formulated by the member states of the African Union, together with the African Development Bank and the United Nations, spells out the risk that extractive industries may reinforce gender disparities in economic opportunities, meaning that women lose out as a by-product of such industries (UNECA, 2011).
Similarly, Ross (2008) claims that exploitation of natural resources harms women’s employment via both demand and supply channels. In his model, female labour supply is reduced via a household income effect, spurred by higher male incomes and/or increased government transfers. The demand for female labour decreases as export-oriented, female-dominated manufacturing is crowded out by a natural resource boom via the so-called ‘Dutch disease’ effects. The theory is tested by Ross using cross-country regressions of female labour force participation on oil wealth and he finds that oil rich countries have fewer women working. The logic is extended to include other natural resources, such as mining. There is, however, less reason to expect these effects locally in sub-Saharan Africa since the manufacturing sector is small and women are able to work in the service sector. In the context of local natural resource extraction in Africa, the effects are a priori ambiguous. We set out to empirically test the links between large-scale mining and women’s labour force participation.
In the research paper “African Mining, Gender and Local Employment” (jointly with Andreas Kotsadam) that this think piece is largely based upon, 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. We treat mine openings and mine closings as natural experiments to explore local labour market changes.
We use a flexible model that accounts for all constant differences between regions, such as mining strategies, institutions, economic characteristics, culture and gender norms and trends over time, including regional economic growth and increased mineral exploration.
: All African industrial mines in production between 1975 and 2010, and Demographic and Health Survey (DHS) clusters per country. (Image: Author’s own)
Industrial mines generate local structural shifts. Subsistence farming becomes less important for both men and women. Moreover, men shift to skilled manual labour, and women shift to service sector jobs. This contradicts the hypothesis formulated by Ross (2009) that natural resource extraction is detrimental to women by failing to provide them with new job opportunities. However, in support of the hypothesis, women’s labour market participation decreases, and it decreases more than that of men. The decrease in labour force participation is highly gendered: work participation for women decreases by 5.4 percentage points with mine opening, whereas the corresponding effect for men is a decrease of 3.2 percentage points but from a much higher mean value. A back-of-the-envelope calculation produces the estimate that 90,000 women across Africa benefit from service sector jobs as a direct result of industrial mining in their communities, but at the same time 280,000 women leave the labour force.
When a mine opens, labour shifts dramatically away from agriculture which accounts for most of the drop in labour force participation. A new mine can change the local agricultural landscape through several channels: competition over land use; expropriation and changes in land prices because of the industry's land-intensive character; decreased yield because of pollution; intra-household reallocation of labour including substitution effects; and changes in demand for agricultural goods.
The drop in agricultural activities is partly offset by increased employment in other sectors. Women who previously worked in agriculture may gain work in the service sector. The effect on services is substantial; it is estimated at a more than 50% increase from the sample mean. Importantly, there are additional benefits to these new jobs: women are more likely to earn cash for work, instead of not being paid or earning in kind, and they have more opportunities to work all year around or occasionally, instead of only working during the agricultural high season.
A woman working next to a mine in Tanzania carrying produce to sell at the market, in July 2013. (Image: Author’s own)
One fear often expressed is that the service sector jobs that women take up are largely jobs in prostitution rather than in restaurants, bars, transportation, hairdressing, and so on. However, we explored changes in lifetime number of sexual partners, and we found no effects on women’s total number of sexual partners. These results are in line with previous results exploring sexual risk taking behavior in Zambia during the copper boom, where an increase in the copper price in fact reduced risk-taking behaviour among young girls (Wilson, 2012). More cash earning opportunities can decrease young girls’ and women’s financial dependence on men, and thus decrease the prevalence of transactional sex. However, sex work may be concentrated in subpopulations that are less likely to be sampled in household surveys, such as temporary migrant workers. If so, our study will not be able to fully capture the size of the transactional sex market.
As we have seen, both women and men shift to new, but different sectors with the opening of a mine. One notable difference is that men can find jobs directly within the mining sector. Our analysis confirms that only a negligible fraction of women engage in large-scale mining activities, whereas local men are significantly more likely to work in mining. In several African countries it is rare for women to go underground because of the heavy nature of the work or due to taboos and stigmas. However, it is not universally true that women do not work in mining: women play an important role in small-scale mining, where they often grind and sieve the ore, but this is beyond the scope of the present study.
The labour market results stand up to a wide battery of robustness checks, such as the use of different definitions of the control group and excluding people who have migrated to their current place of residence. Further evidence using exogenous changes in world prices of minerals shows that the effects are stronger in boom times, and that the labour market effects are temporary and disappear when mines close as the newly stimulated sectors, services and demand for manual labour contract again. The effects are highly spatially concentrated: Individuals living 50km away from a mine are not affected by it.
Female empowerment and child health
To better understand the welfare implications for women, I have explored effects on women’s empowerment in a related but independent paper focusing on the subset of gold mines, “Local Industrial Shocks, Female Empowerment and Infant Mortality: Evidence from Africa’s Gold Mining Industry”. As a result of a mine opening, women in local communities gain some more control over resources and have better access to health care. Interestingly, these women are also less likely to tolerate domestic violence. I subsequently explored effects on infant health. The empirical estimation shows that infant mortality, especially for girls, decreases in these communities. While this is a preliminary finding, it is an important one: infant mortality remains high in many sub-Saharan countries despite recent achievements and despite the strategic focus placed on the issue by the Millennium Development Goals. The research shows that notwithstanding concerns related to pollution,1
the economic gains from mining when correctly distributed to the local population can empower women and reduce infant mortality.
There are large and persistent differences in value added per worker in agriculture and non-agriculture sectors in developing countries (Gollin et al., 2012). With too many workers in low-yielding agriculture, there is a significant productivity gap. The extractive industries can reduce this gap by drawing people from low value added sectors to higher value added sectors, such as services and skilled manual labour and provide cash earning opportunities where before there were few. On the one hand, the mining industry risks creating a gender gap in the labour market, as men benefit more than women. On the other, women have more say in household decisions than before, and young children have better chances of survival in these communities. The research points to a complex set of social and economic effects of large-scale mining.
The economic importance of the natural resource sector is growing in many African countries. It is an industry that can have a substantial effect on local community development, despite its reputation as an enclave industry. As researchers, we try compare outcomes in mining communities with a counterfactual situation in which there is no mine. As policy makers, we want to think about an alternative counterfactual, that of best practice. If policies were in place to ensure fair revenue sharing, gender equality in opportunities and environmental quality, how beneficial could large-scale mines be? Such a thought experiment is important in defining the where the boundaries of possibility are and to ensure that mining, in the future, brings inclusive growth to communities. Inclusive growth means that men and women alike benefit from mining, and that children can grow up in communities with a bright future. Such a bright future is possible if policy makers and mining companies join forces to ensure equal access to work, to provide schooling and to plan for a future when the treasures in the ground are gone.
This think piece builds upon original research. The main paper is “African Mining, Gender and Local Employment”, OxCarre Research Paper 114, May 2013, written together with Andreas Kotsadam, University of Oslo. The think piece additionally builds upon an unpublished research paper by Anja Tolonen: “Local Industrial Shocks, Female Empowerment and Infant Health: Evidence from Africa’s Gold Mining Industry”.
It is important to note that subclinical effects and long-run effects of pollution are not studied here. The finding that infant mortality decreases cannot be interpreted as overall health status of children in local communities improves with mining.
Aragón, F. M. and J. P. Rud. 2013. “Natural Resources and Local Communities: Evidence from a Peruvian Gold Mine,” American Economic Journal: Economic Policy,
Gollin, Douglas, Lagakos, David and Waugh, Michael E. 2013. The Agricultural Productivity Gap
. NBER Working Paper No. w19628. National Bureau of Economic Research, Cambridge (MA).
Ross, M. 2008. “Oil, Islam, and women,” American Political Science Review
, 102(1), 107–123.
UNECA (ed.) .2011. Minerals and Africa’s Development: The International Study Group Report on Africa’s Mineral Regimes
. United Nations Economic Commission for Africa, Addis Ababa, Ethiopia.
Wilson, N. .2012. “Economic Booms and Risky Sexual Behavior: Evidence from Zambian Copper Mining Cities,” Journal of Health Economics,
ABOUT THE AUTHOR
Anja Tolonen is finishing her PhD in Economics at the University of Gothenburg. She is interested in the intersection of the environment and economic development and her research focuses on natural resources, local community development and gender, using micro-level data from developing countries. In her thesis, she explores how African large-scale mining affects labour markets, intra-household bargaining power, child health and crime patterns. Additionally, she examines the involvement of Chinese firms in African mining. Anja is currently a short-term consultant at the World Bank, and has recently been a visiting scholar at the University of California, Berkeley and at the University of Oxford. She is an external researcher at the Oxford Centre for the Analysis of Resource Rich Economies. During 2013 she undertook field work in Tanzanian mining communities, and her future plans include running a randomized control trial to understand ways to help empower women in artisanal mining communities in West Africa.