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Illegal Mining and Human Capital Accumulation: Evidence from the Colombian Gold Rush

Author

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  • Leonardo Bonilla-Mejía

    () (Banco de la República de Colombia)

Abstract

This paper assesses the local effects of gold mining on human capital accumulation in contexts where illegal mining is prevalent. Evidence is based on high-resolution geographic information of gold mining and schools, and rich administrative data from Colombia. I exploit a boom in international gold prices and the exogenous geographic distribution of gold deposits to assess the causal effects of mining. Results indicate that mining increases enrollment in primary school and reduces dropout rates throughout the school cycle. However, mining also reduces standardized test scores and college enrollment, particularly in academic degrees and STEM fields. The estimated effects are considerably larger when both legal and illegal mining are accounted for. I then assess some of the potential mechanisms through which the commodity price shock can affect human capital. While child labor is overall unaffected, young adults between 19 and 25 are more likely to work in the mining sector. Evidence also indicates that mining increases royalties and public investment, with mixed results in terms of school inputs. Mining also intensifies conflict and violence, with potential large negative effects on human capital accumulation. **** RESUMEN: Este trabajo estudia el efecto local de la minería de oro sobre la acumulación de capital humano en contextos en los cuales predomina la minería ilegal. La evidencia está basada en información geográfica de alta resolución de minería y registros administrativos detallados del sistema educativo de Colombia. Para estimar los efectos causales de la minería se explota la variación exógena en los precios internacionales del oro y la distribución geográfica de los depósitos de mineral. Los resultados indican que la minería incrementa la matrícula escolar en primaria y reduce la deserción a lo largo del ciclo escolar. Sin embargo, la minería también tiene efectos negativos sobre el aprendizaje y reduce las probabilidades de accederal sistema de educación superior, particularmente en carreras STEM. Los efectos estimados son considerablemente más grandes cuando se tiene en cuenta tanto la minería legal como la ilegal. En la última sección se prueban distintos mecanismos a través de los cuales el boom minero puede afectar la acumulación de capital humano. Mientras que no hay evidencia de mayor trabajo infantil, los adultos jóvenes entre 19 y 25 años tienen mayores probabilidades de trabajar en el sector minero. La evidencia también muestra que las regalías y la inversion pública aumentaron en los municipios mineros, con resultados mixtos para la provisión de educación escolar. Finalmente, el boom de precios intensifica el conflicto y la violencia en estas regiones, con efectos negativos potencialmente importantes sobre la acumulación de capital humano.

Suggested Citation

  • Leonardo Bonilla-Mejía, 2019. "Illegal Mining and Human Capital Accumulation: Evidence from the Colombian Gold Rush," Documentos de trabajo sobre Economía Regional y Urbana 280, Banco de la Republica de Colombia.
  • Handle: RePEc:bdr:region:280
    DOI: 10.32468/dtseru.280
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    File URL: https://doi.org/10.32468/dtseru.280
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    Keywords

    Natural resource curse; mining; human capital; Colombia; Maldición de recursos naturales; minería; capital humano; Colombia;
    All these keywords.

    JEL classification:

    • Q32 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Exhaustible Resources and Economic Development
    • Q33 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Resource Booms (Dutch Disease)
    • J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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