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on Labour Economics |
| By: | Cederlöf, Jonas (IFAU - Institute for Evaluation of Labour Market and Education Policy) |
| Abstract: | This paper studies the consequences of job loss. While previous literature has relied on mass layof fs and plant closures for identification, I exploit discontinuities in the likelihood of dis placement generated by a last-in-first-out rule used at layof fs in Sweden. Matching data on individual layof f notifications to administrative records, I find that permanent earnings losses are only found among workers losing their job in mass layof fs, whereas workers dis placed in smaller layof fs fully recover. Auxiliary analysis suggests that large layof fs increase exposure to non-employment, prolong unemployment and cause workers to leave the labor force, conceivably by affecting the local labor market |
| Keywords: | last-in-first-out; job loss; displaced worker; mass layoff; earnings loss; |
| JEL: | J63 J64 J65 |
| Date: | 2024–02–06 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:ifauwp:2024_002&r=lab |
| By: | Peter Haan; Izabela Wnuk |
| Abstract: | This paper examines the effect of increasing foreign staffing on the labor market outcomes of native workers in the German long-term care sector. Using administrative social security data covering the universe of long-term care workers and policy-induced exogenous variation, we find that increased foreign staffing reduces labor shortages but has diverging implications for the careers of native workers in the sector. While it causes a transition of those currently employed to jobs with better working conditions, higher wages, and non-manual tasks, it simultaneously diminishes re-employment prospects for the unemployed natives with LTC experience. |
| Keywords: | Immigration, shift-share instrument, long-term care, EU Enlargement |
| JEL: | J61 I11 |
| Date: | 2024 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp2070&r=lab |
| By: | Avdic, Daniel (Deakin University); Karimi, Arizo (Uppsala universitet and UCLS); Sjögren, Anna (IFAU and UCLS); Sundberg, Elin (Uppsala universitet) |
| Abstract: | We study how fathers’ time impacts children’s human capital using the introduction of earmarked paternity leave in Sweden. We use administrative data on parents’ leave uptake and children’s educational outcomes in a difference-in-discontinuities design, exploiting the plausibly random timing of childbirth. We show that the reform decreased average school-leaving grade point averages of sons of non-college fathers by 0.07 standard deviations and increased intergenerational persistence of human capital by 30 percent. We give suggestive evidence that these findings are explained by asymmetric impacts on parents’ time investments owing to family disruptions and (lack of) substitutability of parents’ time inputs. |
| Keywords: | parental leave; socioeconomic gradient; social policy; intergenerational skill transmission; regression discontinuity; |
| JEL: | J12 J13 J16 J18 |
| Date: | 2023–12–22 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:ifauwp:2023_025&r=lab |
| By: | Francesco Agostinelli; Domenico Ferraro; Xincheng Qiu; Giuseppe Sorrenti |
| Abstract: | This paper studies the mechanisms and the extent to which parental wage risk passes through to children’s skill development. Through a quantitative dynamic labor supply model in which two parents choose whether to work short or long hours or not work at all, time spent with children, and child-related expenditures, we find that income risk impacts skill accumulation, permanently lowering children’s skill levels. To the extent that making up for cognitive skill losses during childhood is hard—as available evidence suggests—uninsurable income risk can negatively impact the labor market prospects of future generations. |
| Keywords: | wage risk, household labor supply, child development, social insurance |
| JEL: | D10 J13 J22 |
| Date: | 2024 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_10914&r=lab |
| By: | Sébastien Fontenay; Libertad González Luna |
| Abstract: | We investigate the impact of paternity leave policies on gender role attitudes in the next generation. We measure gender-stereotypical attitudes using an Implicit Association Test with 3, 000 online respondents in six countries. Using an RD design, we observe a significant reduction (-0.20 SD) in gender-stereotypical attitudes among men born post-paternity leave implementation. This shift influences career choices, as men whose fathers were affected by the reform are more inclined to pursue counter-stereotypical jobs, particularly in high-skilled occupations like healthcare and education. Our findings highlight how paternity leave fosters egalitarian gender norms and affects the occupational choices of the next generation. |
| Keywords: | gender norms, paternity leave, female-dominated occupations, regression discontinuity |
| JEL: | J08 J13 J16 J18 |
| Date: | 2024–01 |
| URL: | http://d.repec.org/n?u=RePEc:upf:upfgen:1879&r=lab |
| By: | Dahlberg, Matz (Uppsala University); Egebark, Johan (Arbetsförmedlingen); Vikman, Ulrika (IFAU - Institute for Evaluation of Labour Market and Education Policy) |
| Abstract: | This study uses a randomized control trial (RCT) to evaluate a new program for increased labor market integration of refugees. The program has immediate and substantial short-run effects on employment, corresponding to around 15 percentage points. The effect lasts for three years but eventually fades out, as the control group catches up and reaches the long-run employment level of about 50 percent. We show that the program boosts language skills in the short run, and that this channel explains an increasing share of the effect on employment. Using survey data, we finally measure if the program affects integration in other dimensions, such as psychological, social, political, and navigational integration. Our findings suggest that faster labor market integration in the short run does not lead to increased general integration in the long run. |
| Keywords: | Refugee immigration; Multidimensional integration; Randomized control trial; Field experiment; Labor market program; Employment; |
| JEL: | C93 J08 J15 |
| Date: | 2023–12–13 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:ifauwp:2023_023&r=lab |
| By: | Michela Cella; Elena Manzoni; Francesco Scervini |
| Abstract: | In this paper we study whether and how the belief that the gender of politicians affects their competence on different issues influences electoral outcomes depending on the salience of those issues. We first propose a theoretical model of issue-specific gender bias in elections which can describe both the presence of a real comparative advantage (‘kernel-of-truth’ case, or stereotype) and the case of pure prejudice. We show that, if the bias exists, it influences electoral results and that its effect can be partially reversed by successful information transmission during the electoral campaign. We then empirically investigate the relation between issue salience and women’s performance using US data on House and Senate elections. Estimates of issue salience are obtained using Google Trends data. Exploiting the longitudinal dimension of the dataset at district level and an IV strategy to rule out possible endogeneity, we show a positive correlation between the salience of those issues that are typically listed as feminine and women’s electoral outcomes. We therefore conclude that a bias indeed exists. The average effect of the bias is sizable with respect to the share of votes for women candidates, even if not large enough to significantly increase the probability that women candidates win elections. |
| Keywords: | gender bias, elections, female politicians |
| JEL: | D72 J16 |
| Date: | 2024 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_10922&r=lab |
| By: | Inés Berniell; Raquel Fernández; Sonya Krutikova |
| Abstract: | This paper examines gender inequality focusing on two critical spheres in which gender inequality is generated: education and work. Our objective is to provide a current snapshot of gender inequality across key indicators as well as a dynamic perspective that highlights successes and failures. We facilitate a cross-country comparison as well by grouping countries within Latin America by their level of economics development and drawing comparisons with countries outside the region. Finally, we reflect on differences in the ways that gender inequalities play out across different socio-economic groups, particularly those that highlight other sources of inequality. |
| JEL: | J16 O10 Z13 |
| Date: | 2024–02 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:32104&r=lab |
| By: | Billur Aksoy; Christine L. Exley; Judd B. Kessler |
| Abstract: | A rich literature explores gender differences between men and women, but an increasing share of the population identifies their gender in some other way. Analyzing data on roughly 10, 000 students and 1, 500 adults, we find that such gender minorities are less confident and provide less favorable self-evaluations than equally performing men on a math and science test. We find that these "gender minority gaps" are robust, are as large as—or larger than—gender gaps between men and women, and are domain specific. Administrative data reveals that our confidence and self-evaluation measures are highly predictive of academic performance. |
| JEL: | C91 D91 J16 |
| Date: | 2024–01 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:32061&r=lab |
| By: | Barbara Boelmann (University of Cologne, Department of Economics and ECONtribute: Markets Public Policy, SSC, Universitätsstraße 22, 50937 Cologne, Germany) |
| Abstract: | This paper shows that the local availability of universities acted as a catalyst in the catch-up of women in higher education that has been documented for developed countries in the latter half of the 20th century. It uses the foundation of new univer- sities in the 1960s and 1970s in West German regions which previously did not have a university as a case study to understand how women’s mobility and education decisions interact. I first document women’s low regional mobility in post-war West Germany along with their low educational attainment. Second, I exploit that the university expansion exogenously brought universities to women’s doorsteps in a difference-in- differences (DiD) strategy. Comparing regions which experienced a university opening within 20 km to those where no university was opened, I show that women benefited more than men from a close-by university opening, closing the local gender gap in university education by about 72%. Third, I provide evidence that local universities partly increased university education through reduced costs, while part of the effect is due to higher expected returns, highlighting an important second channel through which universities promote education to local youths. |
| Keywords: | college gender gap, geographic mobility, university expansion |
| JEL: | I23 I24 I28 J16 |
| Date: | 2024–02 |
| URL: | http://d.repec.org/n?u=RePEc:ajk:ajkdps:280&r=lab |
| By: | Gordon Dahl (UC San Diego); Anne Gielen (Erasmus University Rotterdam) |
| Abstract: | Can participation in safety net programs have long-lasting negative effects across multiple generations? Prior work shows a 1993 Dutch disability insurance reform which tightened requirements and lowered benefits for participants resulted in better outcomes for their children. We study the third generation, finding that grandchildren of individuals whose DI eligibility and benefits were reduced are less likely to be born premature, have low birthweight, or experience complicated deliveries. They also have better health and schooling outcomes during early childhood. These early-life improvements are consequential, as they have been linked to better health, education, and labor market outcomes in adulthood. |
| Keywords: | Multigenerational links, disability insurance, child health |
| JEL: | I38 H53 J62 |
| Date: | 2024–02 |
| URL: | http://d.repec.org/n?u=RePEc:crm:wpaper:2406&r=lab |
| By: | Beatriz Muriel Hernández (Executive Director and Senior Principal Researcher of INESAD); Daniela Romero Romay (Associate Researcher of INESAD) |
| Abstract: | This study reviews the conceptual framework of the economic-productive sphere and of gender equality, the aim of which is to establish theoretical-practical lines allowing progress in engaging these two spheres. In this context, equality in opportunities and in rights can be harmonized, though equality of “responsibilities, resources and retribution” by gender are more difficult to reconcile. Also, women’s (economic) empowerment – seen as a way of promoting gender equality – possesses a degree of relation with the theory of growth and wellbeing when an individual has the role of consumer, for which “capabilities” are needed for selecting valuable “functionings”. However, when such a woman takes on the role of worker, producer or businesswoman, her seeking of a high level of economic-productive performance does not imply that she is empowered, nor does the latter imply the former; though there may be a positive correlation between the two. On this basis, economic-productive interventions may harmonize with equality of opportunities by gender. |
| Keywords: | Economic Growth, Social Well-being, Gender, Gender Equality, Empowerment. |
| JEL: | D63 J16 J29 J39 J83 |
| Date: | 2024–02 |
| URL: | http://d.repec.org/n?u=RePEc:adv:wpaper:202403&r=lab |
| By: | David Autor |
| Abstract: | While the utopian vision of the current Information Age was that computerization would flatten economic hierarchies by democratizing information, the opposite has occurred. Information, it turns out, is merely an input into a more consequential economic function, decision-making, which is the province of elite experts. The unique opportunity that AI offers to the labor market is to extend the relevance, reach, and value of human expertise. Because of AI’s capacity to weave information and rules with acquired experience to support decision-making, it can be applied to enable a larger set of workers possessing complementary knowledge to perform some of the higher-stakes decision-making tasks that are currently arrogated to elite experts, e.g., medical care to doctors, document production to lawyers, software coding to computer engineers, and undergraduate education to professors. My thesis is not a forecast but an argument about what is possible: AI, if used well, can assist with restoring the middle-skill, middle-class heart of the US labor market that has been hollowed out by automation and globalization. |
| JEL: | J01 J2 N30 O14 |
| Date: | 2024–02 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:32140&r=lab |
| By: | Paukkeri, Tuuli; Ravaska, Terhi |
| Abstract: | We study whether disability insurance (DI) recipients increase their labour supply after the introduction of an automatic reinstatement policy, i.e. a programme mitigating the risk of losing eligibility for DI benefits due to a trial period of substantially increased work. We use Finnish administrative data and identify the effect of the policy on partial DI recipients by using partial DI applicants whose application was rejected as a control group. Partial DI recipients by definition have substantial remaining work capacity and are therefore potentially more responsive to programmes affecting work incentives than full DI benefit recipients. The rejected individuals have similar work histories, health impairments and remaining work capacity to those who are allowed benefits, enabling us to estimate the effects of automatic reinstatement on labour supply with a credible control group. Based on our estimation results, automatic reinstatement of benefits increases annual earnings modestly, but for those with mental disorders the effect is larger. |
| Keywords: | disability insurance, labour supply, automatic reinstatement, Social security, taxation and inequality, J14, H55, fi=Sosiaaliturva|sv=Social trygghet|en=Social security|, fi=Työmarkkinat|sv=Arbetsmarknad|en=Labour markets|, |
| Date: | 2024 |
| URL: | http://d.repec.org/n?u=RePEc:fer:wpaper:163&r=lab |
| By: | Alan Manning; Graham Mazeine |
| Abstract: | Return migration is important, but how many migrants leave and who is poorly understood. This paper proposes a new method for estimating return migration rates using aggregated repeated cross-sectional data, treating the number of migrants in a group who arrived in a particular year as an unobserved fixed effect, and the observed number (including, importantly, observed zeroes) in the arrival or subsequent years as observations from a Poisson distribution. Compared to existing methods, this allows us to estimate return rates for many more migrant groups, allowing more in-depth analysis of the factors that influence return migration rates. We apply this method to US data and find a decreasing hazard, with most returns occurring by eight years after arrival, when about 13% of migrants have left. The return rate is significantly lower for women, those who arrive at a young age, and those from poorer; it is higher for those on non-immigrant visas for work or study. We also provide suggestive evidence that, conditional on their country of origin, those with lower education are more likely to return. |
| Keywords: | return migration |
| Date: | 2024–02–12 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepdps:dp1980&r=lab |
| By: | Yifan Gong; Todd R. Stinebrickner; Ralph Stinebrickner; Yuxi Yao |
| Abstract: | We examine the initial post-college geographic location decisions of students from hometowns in the Appalachian region that often lack substantial high-skilled job opportunities, focusing on the role of non-pecuniary considerations. Novel survey questions in the spirit of the contingent valuation approach allow us to measure the full non-pecuniary benefits of each relevant geographic location, in dollar equivalents. A new specification test is designed and implemented to provide evidence about the quality of these non-pecuniary measures. Supplementing perceived location choice probabilities and expectations about pecuniary factors with our new non-pecuniary measures allows us to estimate a stylized model of location choice and obtain a comprehensive understanding of the importance of pecuniary and non-pecuniary factors. We also combine the non-pecuniary measures with realized location and earnings outcomes to characterize inequality in overall welfare. |
| JEL: | J0 J32 J38 J61 |
| Date: | 2024–02 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:32127&r=lab |
| By: | Robert Z. Lawrence (Peterson Institute for International Economics) |
| Abstract: | This paper considers climate policies, not from the perspective of their environmental impacts, but rather their likely effects on labor and investments. While the aggregate impact of the green transition on jobs and investment may be modest, it will require significant reallocation of labor and capital within and across industries. Although the green transition brings new opportunities for employment and investment in renewable technologies, many workers and communities tied to the fossil fuel industry may not benefit from these advances due to skills mismatch and geographic constraints. Both the United States and the European Union acknowledge the importance of achieving "climate justice" and "leaving no one behind" in their decarbonization efforts. However, current policies and resources in the United States may fall short, with inadequate assistance reaching too many communities and a narrow focus on green jobs. In Europe, while the Just Transition Fund complements existing programs, effective implementation of place-based policies remains challenging due to the need for specific, localized responses. |
| Date: | 2024–01 |
| URL: | http://d.repec.org/n?u=RePEc:iie:wpaper:wp24-1&r=lab |
| By: | KATAGIRI Mitsuru |
| Abstract: | This study investigates the effects of employment protection legislation (EPL) on entrepreneurship, firm dynamics, and economic growth in a general equilibrium model that incorporates endogenous Schumpeterian growth. The model implies that more stringent EPL encourages households to accumulate more firm-specific human capital, which raises the opportunity cost to start a business. Using Japanese firm- and household-level microdata to calibrate parameter values, the quantitative exercise reveals that EPL reform aimed at its elimination could stimulate entrepreneurship in the household sector, thus boosting economic growth through more creative destruction in the firm sector. A partial equilibrium model that disregards the general equilibrium effects can overestimate or underestimate the policy effects of the EPL reform on entrepreneurship and economic growth. Policies that directly support firm entries or incumbents' research-and-development investment have limited impacts on economic growth as long as stringent EPL exists. |
| Date: | 2024–02 |
| URL: | http://d.repec.org/n?u=RePEc:eti:dpaper:24022&r=lab |
| By: | Barile, Lory (Department of Economics, University of Warwick); Drouvelis, Michalis (Department of Economics, University of Birmingham) |
| Abstract: | A substantial body of literature has shown that women shy away from competition against men, which has been put forward as an explanation for the significant gender differences observed in career promotions and salary negotiations. It is therefore of crucial importance to understand the conditions under which the gender gap in competitiveness can be reduced. In this study, we explore the role of priming. Our findings replicate previous work showing that, in the absence of primes, women compete less than men. By contrast, introducing a priming task can eliminate gender disparities in competitiveness, ceteris paribus; however, the effects are stronger when neutral primes are used. We perform sentiment analysis and attribute this to the more negative emotions triggered in the neutral priming condition, making women more competitive. Overall, our results indicate that costless and simple tools such as priming can be adopted by organisations aiming at reducing gender inequalities in the workplace. |
| Keywords: | competitiveness ; gender differences ; priming ; laboratory experiment JEL Codes: C92 ; D03 |
| Date: | 2024 |
| URL: | http://d.repec.org/n?u=RePEc:wrk:warwec:1490&r=lab |
| By: | Vilcassim, Naufel J. |
| Abstract: | Among the millions of entrepreneurs in developing economies, few are able to earn a decent livelihood. To help these entrepreneurs succeed, governmental and nongovernmental organizations invest billions of dollars every year in providing training programs. Many of these programs involve providing entrepreneurs with mentors. Unfortunately, the effects of these programs are often muted, or even null, for woman-owned firms. Against this backdrop, we tested whether gender matching, where female entrepreneurs are randomly paired with a female mentor, could help address the gender gap. Findings from a randomized controlled field experiment with 930 Ugandan entrepreneurs show that mentor gender has a powerful impact on female entrepreneurs. Firm sales and profits of female entrepreneurs guided by a female mentor increased by, on average, 32% and 31% compared with the control group, and these estimates are even larger for female entrepreneurs with high aspirations. In contrast, female entrepreneurs guided by a male mentor did not significantly improve performance compared with the control group. We provide suggestive mechanism evidence that female mentor-mentee arrangements were characterized by more positive engagements. |
| Keywords: | female entrepreneurs; gender gap; glass ceiling; mentorship gender-matching; randomized controlled field experiment; small firm growth; developing economies; (ESRC) joint Growth Research Program; the Deloitte Institute for Innovation and Entrepreneurship (DIIE); and the universities the authors were affiliated with when the research was conducted. |
| JEL: | L20 J16 |
| Date: | 2023–12–22 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:120477&r=lab |
| By: | Kevin C. Corinth; Jeff Larrimore |
| Abstract: | We find that each of the past four generations of Americans was better off than the previous one, using a post-tax, post-transfer income measure constructed annually from 1963-2022 based on the Current Population Survey Annual Social and Economic Supplement. At age 36–40, Millennials had a real median household income that was 18 percent higher than that of the previous generation at the same age. This rate of intergenerational progress was slower than that experienced by the Silent Generation (34 percent) and Baby Boomers (27 percent), but similar to that experienced by Generation X (16 percent). Slower progress for Generation X and Millennials is due to their stalled growth in work hours—holding work hours constant, they experienced a greater intergenerational increase in real market income than Baby Boomers. Intergenerational progress for Millennials under age 30 has remained robust as well, although their income growth largely results from higher reliance on their parents. We also find that the higher educational costs incurred by younger generations is far outweighed by their lifetime income gains. |
| Keywords: | Full income; Growth; Generations; Mobility; Millennials |
| JEL: | D31 E24 H24 J30 J62 |
| Date: | 2024–02–02 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedgfe:2024-07&r=lab |
| By: | Song, Teresa |
| Abstract: | South Korea’s economic growth (EG) miracle has been a source of discussion since the 1990s. The assumption of relatively equitable distribution of resources should be contested, as a growing base of evidence shows that human development (HD) and gender parity improvements are not automatic. To that effect, this dissertation asks the question of why the gender equality index (GEI), a subset of the historical index of human development (HIHD) lagged, despite GDP per capita and HIHD growth. It is hypothesised that the widening of the gender pay gap (GPG) during 1976-1996, was predominantly responsible for worsening the GEI, leading to the divergence between GDP, HIHD and GEI. The occupational wage survey (OWS) conducted annually since 1971, by the South Korean Ministry of Labour is used to perform econometric analysis to understand the GPG time trend and how it was impacted by marital status and the introduction of trade unions. The results demonstrate that whilst earnings increased, the GPG widened, with marital status and trade unions offering explanations for increased discrimination. My findings provide support for analysing the benefits of redistribution on a gendered basis and making a case for gender equality improvements on both an intrinsic and instrumental level. Much further research can be done in this area, especially in the quantification of culture and its ongoing legacy on societal gendered roles in determining GPG inter alia. |
| Keywords: | gender pay gap; gender equality; economic growth; human development; South Korean growth; marital status; trade unions |
| JEL: | N0 R14 J01 |
| Date: | 2024–02 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:122006&r=lab |
| By: | Russell Cooper; John C. Haltiwanger; Jonathan Willis |
| Abstract: | This paper studies competing sources of declining dynamism. Evidence shows that an important component of this decline is accounted for by the reduction in the response of employment to shocks in US establishments. Using a plant level dynamic optimization problem as a framework for analysis, four potential reasons for this decline are studied: (i) a change in exogenous processes for profits, (ii) an increase in impatience, (iii) increased market power and (iv) increasing adjustment costs. We identify and quantity the contribution of each of these factors building on a simulated method of moments estimation of our structural model. Our results indicate that the reduction in responsiveness largely reflects increased costs of employment adjustment. Changes in market power, as captured by changes in the curvature of the revenue, function play a minimal role. But, in the presence of rising adjustment costs, measured sales-weighted markups using the recently popular indirect production approach rise substantially, along with rising dispersion and skewness of such measured markups. |
| JEL: | E20 J63 L23 O44 |
| Date: | 2024–02 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:32130&r=lab |
| By: | McNamara, Sarah; Neidhöfer, Guido; Lehnert, Patrick |
| Abstract: | We estimate intergenerational mobility of education for people born 1940-1999 at the subnational level for 40 European countries. The result is a panel of mobility indices for 105 mesoregions (NUTS1), and 215 microregions (NUTS2). We use these indices to make three contributions. First, we describe the geography of intergenerational mobility in Europe. Second, adapting a novel weighting procedure based on cohorts' relative economic contribution, we transform cohort-linked measures into annual measures of intergenerational mobility for each region. Third, we investigate the relationship between intergenerational mobility and innovation, and find robust evidence that higher mobility is associated with increased innovation. |
| Keywords: | Intergenerational Mobility, Equality of Opportunity, Human Capital, Innovation, Regional Economic Performance, Europe |
| JEL: | D63 I24 J62 O15 |
| Date: | 2024 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:283012&r=lab |
| By: | Mulder, Niels; Bryan, Gharad; Lee, Neil; Oliveira Cunha, Juliana; Shawa, Benjamin; Wani, Shahrukh; Werker, Eric |
| Abstract: | The Copperbelt province has been the growth engine of Zambia since independence. It was the nation’s mining and industrial hub, accounting for all of Zambia’s large-scale copper mining in the early 2000s. It continues to account for nearly a quarter of national GDP, and per capita GDP is the 3rd highest in the country. However, from 2015 to 2022, the Copperbelt’s economy has contracted, averaging a real GDP growth rate of -1.0% – four percentage points below the national average – ranking lowest out of all provinces. Moreover, over the same period, poverty increased by 17% – seven percentage points above the national average. Despite the growth challenges, the Copperbelt harbours significant potential to drive Zambia’s economic transformation. The global energy transition has reinvigorated interest in the province’s copper mines, and there is potential to increase what the Copperbelt – and Zambia, more generally – get out of their operational mining base. The province also boasts the country’s highest urbanisation and education rates, and has infrastructural and geographical advantages, positioning it well to reclaim its status as an industrial hub. However, unlocking this potential will be challenging. While Zambia relies heavily on natural resources, especially copper, this reliance is heightened in the Copperbelt, where mining represented nearly 40% of GDP in 2013, and continues to account for one-third of national copper production. While resource rents can contribute to economic growth, overreliance on natural resources creates a myriad of challenges. These include, among others, revenue volatility, rent-seeking, institutional weaknesses and corruption, and the so-called Dutch Disease – where natural resource revenues can hurt other sectors by causing inflation and/or currency appreciation. Consequently, regions with abundant natural resources tend to have unequal patterns of growth, worse development outcomes than their non-resource-rich neighbours, and poor development in non-resource sectors. Given the substantial challenges and opportunities that the province presents to propel Zambia to middle-income status, the government of Zambia has requested the IGC to summarise key economic trends in the region and outline policy options on how to approach regeneration. |
| Keywords: | copper; Zambia |
| JEL: | R14 J01 N0 |
| Date: | 2024–02–16 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:122054&r=lab |