nep-afr New Economics Papers
on Africa
Issue of 2023‒12‒18
four papers chosen by
Sam Sarpong, Xiamen University Malaysia Campus

  1. Economic Opportunities and Human Capital Investments: Evidence from Artisanal Gold Mining in Africa By Ghazarian, Avenia; Khan, Akib
  2. Implementation Obstacles and Political Appeal of Environmental Taxes in Sub-Saharan Africa: Reflections from Selected Countries By Occhiali, Giovanni
  3. The Wellbeing Effects of an Old Age Pension: Experimental Evidence for Ekiti State in Nigeria By María Laura Alzua; Natalia Cantet; Ana C. Dammert; Damilola Olajide
  4. A reform option for pension fund contribution as tax expenditure in South Africa: A microsimulation model approach using tax administrative data By Ada Jansen; Winile Ngobeni; Wynnona Steyn

  1. By: Ghazarian, Avenia (Mistra Center for Sustainable Markets (Misum)); Khan, Akib (Uppsala University)
    Abstract: How does human capital investment respond to local economic opportunities? Income gains can increase the demand for schooling while new jobs raise the opportunity costs. We investigate this question in the context of rapid growth in artisanal gold mining in sub-Saharan Africa. We compile 45 waves of Demographic and Health Surveys covering 1.3 million individuals from 14 countries in this region. Identification comes from two sources of variation: one in the global gold price and the other in the exposure of households to places that are geologically suitable for artisanal gold mining. We find that a near-tripling of the global gold price – reflecting changes between 2005 and 2010 – leads to a decline in school attendance: by 3.1 pp for 11 to 15-year-olds and by 2.3 pp for 16 to 20-year-olds who live near gold-suitable areas. These reductions are higher for boys. Taken together, these results highlight the potential costs of economic development driven by natural resources.
    Keywords: Human capital investment; Economic opportunities; Artisanal mining; Gold; Africa
    JEL: J24 O15 Q32
    Date: 2023–11–27
  2. By: Occhiali, Giovanni
    Abstract: Increasing the slow pace of adoption of environmental taxes across low-income countries has become a significant priority among international financial institutions, multilateral development banks, and international donors. Yet little is known about the practical institutional, administrative, and political obstacles that have led to their slow implementation and how they can be made more appealing, especially across sub-Saharan Africa. Based on an extensive literature review and 16 in-depth interviews with ministries of finance, revenue authorities, and other government stakeholders across six African countries, this paper provides some evidence that will support action and research on this theme. While there are differences across the countries covered, a lack of data and analytical capacity to develop effective environmental taxes is a common theme, as well as the historical prioritisation of their revenue mobilisation capacity over their environmental impact. A great variety of government actors with a mandate over natural resources, often with competing policy priorities, coupled with a lack of coordination fora, has also impeded the harmonisation of the environmental charges they levy. These measures are also often perceived to be regressive and to pose an obstacle to industrial development, lowering their appeal, given that poverty reduction and employment creation are an overarching priority. Nonetheless, support for introducing specific environmental tax measures exists across the population and policymakers, especially if their revenue can be earmarked for environmental purposes.
    Keywords: Climate Change, Environment, Governance,
    Date: 2023
  3. By: María Laura Alzua (CEDLAS-IIE-FCE-UNLP, CONICET & Partnership for Economic Policy); Natalia Cantet (Department of Economics and Finance, Universidad EAFIT); Ana C. Dammert (Economics and International Affairs, Carleton University); Damilola Olajide (Initiative for Evidence-Based Development and Empowerment)
    Abstract: Many countries in the developing world have implemented old-age pensions. Evidence of the impact of such policies on the elderly in sub-Saharan Africa, however, is scarce. We provide evidence from a randomized evaluation of an unconditional old-age pension targeted at the elderly in Ekiti State, Nigeria. Our findings show that treated beneficiaries self-report better quality of life and a more stable mental health. We also provide evidence of spillover effects on the labor outcomes of other household members and of household savings patterns as well as support for interventions aimed at improving the welfare of elderly poor citizens and other household members.
    JEL: C21 C93 H31 H55 H75 I38
    Date: 2023–12
  4. By: Ada Jansen; Winile Ngobeni; Wynnona Steyn
    Abstract: South Africa has a progressive broad-based personal income tax system with relatively few tax expenditures. The two most important are the medical contribution plus additional tax credits for medical expenses, and the deductions allowed for retirement contributions. A pertinent question for tax reform in South Africa is whether redistributive gains can be achieved by restructuring expenditures in the personal income tax system. This paper considers the redistributive implications of converting the tax deduction for retirement contributions to a tax credit.
    Keywords: Pensions, Tax expenditures, Microsimulation, Tax credit
    Date: 2023

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