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Lights Off, Lights On: The Effects of Electricity Shortages on Small Firms

Author

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  • Morgan Hardy
  • Jamie McCasland

Abstract

Entrepreneurs in developing countries report that unreliable electricity imposes a serious constraint, yet little evidence exists on how blackouts impact the micro-firms that account for the majority of employment. This article estimates the effects of outages on small firms using original firm-level panel data and finds evidence of differential effects by firm size. Firms without employees experience large reductions in revenues and profits. Outages have no measurable effect on the output of firms with employees, where worker hours increase, weekly wages paid decrease, and the analysis fails to reject the null hypothesis that blackouts have no effect on (average firm-level) worker hourly wages.

Suggested Citation

  • Morgan Hardy & Jamie McCasland, 2021. "Lights Off, Lights On: The Effects of Electricity Shortages on Small Firms," The World Bank Economic Review, World Bank, vol. 35(1), pages 19-33.
    • Handle: RePEc:oup:wbecrv:v:35:y:2021:i:1:p:19-33.
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    File URL: http://hdl.handle.net/10.1093/wber/lhz028
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    Cited by:

    1. Yu, Jian & Liu, Peng & Fu, Dahai & Shi, Xunpeng, 2023. "How do power shortages affect CO2 emission intensity? Firm-level evidence from China," Energy, Elsevier, vol. 282(C).

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