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Jobs ! electricity shortages and unemployment in Africa

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  • Mensah,Justice Tei

Abstract

This paper presents evidence on how the provision of unreliable electricity constrains expansion in the productive sectors of the economy, consequently leading to a reduction in the number of employment opportunities in Africa. Using geodata on electricity transmission networks on the continent, the paper computes an index that explores spatial and time variations in technical losses in the electricity network as an instrument for electricity shortages. The instrument is combined with geo-referenced data from the Afrobarometer and Enterprise Surveys from more than 20 African countries to estimate the causal impact of electricity shortages on employment, and the mechanisms driving the impact. Results from the paper reveal that electricity shortages exert a substantial negative impact on employment rates in Africa. The evidence also shows three channels by which electricity shortages affect labor market participation. First, on the extensive margin, electricity shortages constrain the creation of new businesses through their negative effect on entrepreneurship. Second, in the intensive margin, electricity shortages reduce the output and productivity of existing firms, thereby causing them to reduce labor demand. Third, electricity shortages act as a distortion in the business climate, thereby reducing the trade and export competitiveness of African firms.

Suggested Citation

  • Mensah,Justice Tei, 2018. "Jobs ! electricity shortages and unemployment in Africa," Policy Research Working Paper Series 8415, The World Bank.
    • Handle: RePEc:wbk:wbrwps:8415
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    Citations

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    Cited by:

    1. Abiodun, Kehinde & Gilbert, Ben, 2022. "Does universal electrification shield firms from productivity loss?," World Development Perspectives, Elsevier, vol. 28(C).
    2. Minjae Son & Minsoo Kim & Hongseok Kim, 2023. "Sector Coupling and Migration towards Carbon-Neutral Power Systems," Energies, MDPI, vol. 16(4), pages 1-12, February.
    3. Paul Nduhuura & Matthias Garschagen & Abdellatif Zerga, 2020. "Mapping and Spatial Analysis of Electricity Load Shedding Experiences: A Case Study of Communities in Accra, Ghana," Energies, MDPI, vol. 13(17), pages 1-26, August.
    4. Florian Morvillier, 2020. "Infrastructures and the real exchange rate," EconomiX Working Papers 2020-26, University of Paris Nanterre, EconomiX.
    5. World Bank Group, "undated". "Africa's Pulse, No. 17, April 2018," World Bank Publications - Reports 29667, The World Bank Group.
    6. Daniel Gurara & Dawit Tessema, 2018. "Losing to Blackouts: Evidence from Firm Level Data," IMF Working Papers 2018/159, International Monetary Fund.
    7. Chapel, Capucine, 2022. "Impact of official development assistance projects for renewable energy on electrification in sub-Saharan Africa," World Development, Elsevier, vol. 152(C).
    8. Mensah,Justice Tei & Traore,Nouhoum-000531164, 2022. "Infrastructure Quality and FDI Inflows : Evidence from the Arrival of High-Speed Internet in Africa," Policy Research Working Paper Series 9946, The World Bank.
    9. Blimpo, Moussa P. & Postepska, Agnieszka & Xu, Yanbin, 2020. "Why is household electricity uptake low in Sub-Saharan Africa?," World Development, Elsevier, vol. 133(C).
    10. Kabinet Kaba, 2021. "Exports Promotion Policies for African Manufacturing Firms : Does electricity infrastructure matter more than exchange rate undervaluation ?," Working Papers hal-03548456, HAL.

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