IDEAS home Printed from https://ideas.repec.org/p/unu/wpaper/wp-2024-20.html
   My bibliography  Save this paper

Watts happening to work? The labour market effects of South Africa's electricity crisis

Author

Listed:
  • Haroon Bhorat
  • Timothy Köhler

Abstract

Frequent electricity outages threaten to impede the benefits of expanded access achieved by many developing countries in recent decades. A large literature documents these negative effects, however almost none consider labour market effects. This paper merges labour force survey microdata with high-frequency electricity supply and demand data to provide the first estimates of the relationships between outages and labour market outcomes in South Africa, a country characterized by frequent, severe outages referred to as load shedding.

Suggested Citation

  • Haroon Bhorat & Timothy Köhler, 2024. "Watts happening to work? The labour market effects of South Africa's electricity crisis," WIDER Working Paper Series wp-2024-20, World Institute for Development Economic Research (UNU-WIDER).
    • Handle: RePEc:unu:wpaper:wp-2024-20
    as

    Download full text from publisher

    File URL: https://www.wider.unu.edu/sites/default/files/Publications/Working-paper/PDF/wp2024-20-labour-market-effects-South-Africa-electricity-crisis.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Abhijit Banerjee & Sebastian Galiani & Jim Levinsohn & Zoë McLaren & Ingrid Woolard, 2008. "Why has unemployment risen in the New South Africa?1," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 16(4), pages 715-740, October.
    2. Carlsson, Fredrik & Demeke, Eyoual & Martinsson, Peter & Tesemma, Tewodros, 2020. "Cost of power outages for manufacturing firms in Ethiopia: A stated preference study," Energy Economics, Elsevier, vol. 88(C).
    3. Timothy Köhler & Haroon Bhorat & Robert Hill, 2023. "The effect of wage subsidies on job retention in a developing country: Evidence from South Africa," WIDER Working Paper Series wp-2023-114, World Institute for Development Economic Research (UNU-WIDER).
    4. repec:aer:wpaper:ef4258a38e7a is not listed on IDEAS
    5. Michael Rogan & Caroline Skinner, 2022. "The COVID-19 crisis and the South African informal economy: A stalled recovery," WIDER Working Paper Series wp-2022-40, World Institute for Development Economic Research (UNU-WIDER).
    6. Gindling, T.H. & Newhouse, David, 2014. "Self-Employment in the Developing World," World Development, Elsevier, vol. 56(C), pages 313-331.
    7. Taryn Dinkelman, 2011. "The Effects of Rural Electrification on Employment: New Evidence from South Africa," American Economic Review, American Economic Association, vol. 101(7), pages 3078-3108, December.
    8. Alberto Abadie & Susan Athey & Guido W Imbens & Jeffrey M Wooldridge, 2023. "When Should You Adjust Standard Errors for Clustering?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 138(1), pages 1-35.
    9. Gabriel Espi-Sanchis & Murray Leibbrandt & Vimal Ranchhod, 2022. "Age, employment and labour force participation outcomes in COVID-era South Africa," Development Southern Africa, Taylor & Francis Journals, vol. 39(5), pages 664-688, September.
    10. Kerr, Andrew & Wittenberg, Martin, 2021. "Union wage premia and wage inequality in South Africa," Economic Modelling, Elsevier, vol. 97(C), pages 255-271.
    11. Abbasi ,Mansoureh & Lebrand,Mathilde Sylvie Maria & Mongoue,Arcady Bluette & Pongou,Roland & Zhang,Fan, 2022. "Roads, Electricity, and Jobs: Evidence of Infrastructure Complementarity in Sub-Saharan Africa," Policy Research Working Paper Series 9976, The World Bank.
    12. Clément de Chaisemartin & Xavier D’Haultfœuille, 2023. "Two-way fixed effects and differences-in-differences with heterogeneous treatment effects: a survey," The Econometrics Journal, Royal Economic Society, vol. 26(3), pages 1-30.
    13. Meles, Tensay Hadush & Mekonnen, Alemu & Beyene, Abebe D. & Hassen, Sied & Pattanayak, Subhrendu K. & Sebsibie, Samuel & Klug, Thomas & Jeuland, Marc, 2021. "Households' valuation of power outages in major cities of Ethiopia: An application of stated preference methods," Energy Economics, Elsevier, vol. 102(C).
    14. Ricardo Hausmann & Tim O'Brien & Andres Fortunato & Alexia Lochmann & Kishan Shah & Lucila Venturi & Sheyla Enciso & Ekaterina Vashkinskaya & Ketan Ahuja & Bailey Klinger & Federico Sturzenegger & Mar, 2023. "Growth Through Inclusion in South Africa," CID Working Papers 434, Center for International Development at Harvard University.
    15. Goodman-Bacon, Andrew, 2021. "Difference-in-differences with variation in treatment timing," Journal of Econometrics, Elsevier, vol. 225(2), pages 254-277.
    16. Hashemi, Majid, 2021. "The economic value of unsupplied electricity: Evidence from Nepal," Energy Economics, Elsevier, vol. 95(C).
    17. Rob Davies & James Thurlow, 2010. "Formal–Informal Economy Linkages And Unemployment In South Africa," South African Journal of Economics, Economic Society of South Africa, vol. 78(4), pages 437-459, December.
    18. Mensah, Justice Tei, 2024. "Jobs! Electricity shortages and unemployment in Africa," Journal of Development Economics, Elsevier, vol. 167(C).
    19. Mosomi, Jacqueline, 2022. "Labour Market and Unpaid Childcare Trajectories by Gender During the COVID-19 Pandemic in South Africa: Lessons for Policy," Working Papers 43a51049-efbd-44ba-afb6-e, African Economic Research Consortium.
    20. Kingdon, Geeta Gandhi & Knight, John, 2004. "Unemployment in South Africa: The Nature of the Beast," World Development, Elsevier, vol. 32(3), pages 391-408, March.
    21. Chen, Hao & Yan, Haobo & Gong, Kai & Geng, Haopeng & Yuan, Xiao-Chen, 2022. "Assessing the business interruption costs from power outages in China," Energy Economics, Elsevier, vol. 105(C).
    22. Meles, Tensay Hadush, 2020. "Impact of power outages on households in developing countries: Evidence from Ethiopia," Energy Economics, Elsevier, vol. 91(C).
    23. Diego Restuccia & Richard Rogerson, 2008. "Policy Distortions and Aggregate Productivity with Heterogeneous Plants," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 11(4), pages 707-720, October.
    24. Zaakhir Asmal & Haroon Bhorat & Alexia Lochmann & Lisa Martin & Kishan Shah, 2024. "Supply-Side Economics of a Good Type: Supporting and Expanding South Africa’s Informal Economy," Growth Lab Working Papers 228, Harvard's Growth Lab.
    25. Haroon Bhorat & Tim Köhler & Amy Thornton & Morné Oosthuizen, 2020. "Jobs and COVID-19: Measuring Work-Related Physical Interaction," Working Papers 202003, University of Cape Town, Development Policy Research Unit.
    26. Marianne Bertrand & Esther Duflo & Sendhil Mullainathan, 2004. "How Much Should We Trust Differences-In-Differences Estimates?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 119(1), pages 249-275.
    27. Vimal Ranchhod & Reza Che Daniels, 2021. "Labour Market Dynamics in South Africa at the Onset of the COVID‐19 Pandemic," South African Journal of Economics, Economic Society of South Africa, vol. 89(1), pages 44-62, March.
    28. Fried, Stephie & Lagakos, David, 2021. "Rural electrification, migration and structural transformation: Evidence from Ethiopia," Regional Science and Urban Economics, Elsevier, vol. 91(C).
    29. Andersen, Thomas Barnebeck & Dalgaard, Carl-Johan, 2013. "Power outages and economic growth in Africa," Energy Economics, Elsevier, vol. 38(C), pages 19-23.
    30. Orvika Rosnes & Anton Eberhard & Maria Shkaratan & Haakon Vennemo, 2011. "Africa's Power Infrastructure : Investment, Integration, Efficiency," World Bank Publications - Books, The World Bank Group, number 2290, April.
    31. Joshua Budlender, 2024. "Surviving in the dark: the mortality effects of reducing rolling blackouts," WIDER Working Paper Series wp-2024-44, World Institute for Development Economic Research (UNU-WIDER).
    32. Chen, Hao & Jin, Lu & Wang, Mingming & Guo, Lin & Wu, Jingwen, 2023. "How will power outages affect the national economic growth: Evidence from 152 countries," Energy Economics, Elsevier, vol. 126(C).
    33. Elliott, Robert J.R. & Nguyen-Tien, Viet & Strobl, Eric A., 2021. "Power outages and firm performance: A hydro-IV approach for a single electricity grid," Energy Economics, Elsevier, vol. 103(C).
    34. Haroon Bhorat & Tim Köhler & Morné Oosthuizen & Amy Thornton & Ben Stanwix & François Steenkamp, 2020. "The Economics of Covid-19 in South Africa: Early Impressions," Working Papers 202004, University of Cape Town, Development Policy Research Unit.
    35. Kenneth Lee & Edward Miguel & Catherine Wolfram, 2020. "Does Household Electrification Supercharge Economic Development?," Journal of Economic Perspectives, American Economic Association, vol. 34(1), pages 122-144, Winter.
    36. Timothy Köhler & Haroon Bhorat, 2023. "Wages and Wage Inequality During the COVID-19 Pandemic in South Africa," Working Papers 202308, University of Cape Town, Development Policy Research Unit.
    37. Timothy Köhler & Haroon Bhorat & Robert Hill & Benjamin Stanwix, 2023. "Lockdown stringency and employment formality: evidence from the COVID-19 pandemic in South Africa," Journal for Labour Market Research, Springer;Institute for Employment Research/ Institut für Arbeitsmarkt- und Berufsforschung (IAB), vol. 57(1), pages 1-28, December.
    38. Derek Yu & Jade Botha & Moegammad Faeez Nackerdien, 2023. "Examining the South African labour market during the COVID-19 lockdown period," Development Southern Africa, Taylor & Francis Journals, vol. 40(6), pages 1343-1364, November.
    39. Ivan Turok & Justin Visagie, 2022. "The divergent pathways of the pandemic within South African cities," Development Southern Africa, Taylor & Francis Journals, vol. 39(5), pages 738-761, September.
    40. Jens Matthias Arnold & Aaditya Mattoo & Gaia Narciso, 2008. "Services Inputs and Firm Productivity in Sub-Saharan Africa: Evidence from Firm-Level Data," Journal of African Economies, Centre for the Study of African Economies, vol. 17(4), pages 578-599, August.
    41. Martin Wittenberg, 2017. "Wages and Wage Inequality in South Africa 1994–2011: Part 1 – Wage Measurement and Trends," South African Journal of Economics, Economic Society of South Africa, vol. 85(2), pages 279-297, June.
    42. Justice Tei Mensah & Nouhoum Traore, 2024. "Infrastructure Quality and FDI Inflows: Evidence from the Arrival of High-Speed Internet in Africa," The World Bank Economic Review, World Bank, vol. 38(1), pages 1-23.
    43. 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.
    44. Ihsaan Bassier & Joshua Budlender & Rocco Zizzamia & Ronak Jain, 2023. "The labour market and poverty impacts of COVID‐19 in South Africa," South African Journal of Economics, Economic Society of South Africa, vol. 91(4), pages 419-445, December.
    45. Muna Shifa & David Gordon & Murray Leibbrandt & Mary Zhang, 2022. "Socioeconomic-Related Inequalities in COVID-19 Vulnerability in South Africa," IJERPH, MDPI, vol. 19(17), pages 1-20, August.
    46. Callaway, Brantly & Sant’Anna, Pedro H.C., 2021. "Difference-in-Differences with multiple time periods," Journal of Econometrics, Elsevier, vol. 225(2), pages 200-230.
    47. Daniela Casale & Debra Shepherd, 2022. "The gendered effects of the Covid-19 crisis in South Africa: Evidence from NIDS-CRAM waves 1–5," Development Southern Africa, Taylor & Francis Journals, vol. 39(5), pages 644-663, September.
    48. Jonas Hjort & Jonas Poulsen, 2019. "The Arrival of Fast Internet and Employment in Africa," American Economic Review, American Economic Association, vol. 109(3), pages 1032-1079, March.
    49. Haroon Bhorat & Adaiah Lilenstein & Ben Stanwix, 2021. "The Impact of the National Minimum Wage in South Africa: Early Quantitative Evidence," Working Papers 202104, University of Cape Town, Development Policy Research Unit.
    50. Martin Wittenberg, 2017. "Wages and Wage Inequality in South Africa 1994–2011: Part 2 – Inequality Measurement and Trends," South African Journal of Economics, Economic Society of South Africa, vol. 85(2), pages 298-318, June.
    51. Cole, Matthew A. & Elliott, Robert J.R. & Occhiali, Giovanni & Strobl, Eric, 2018. "Power outages and firm performance in Sub-Saharan Africa," Journal of Development Economics, Elsevier, vol. 134(C), pages 150-159.
    52. Robert Hill & Tim Köhler, 2021. "Mind the gap: The distributional effects of South Africa’s national lockdown on gender wage inequality," Working Papers 202101, University of Cape Town, Development Policy Research Unit.
    53. Reza C. Daniels & Daniela Casale, 2022. "The impact of COVID-19 in South Africa during the first year of the crisis: Evidence from the NIDS-CRAM survey," Development Southern Africa, Taylor & Francis Journals, vol. 39(5), pages 605-622, September.
    54. Fakih Ali & Ghazalian Pascal & Ghazzawi Nancy, 2020. "The Effects of Power Outages on the Performance of Manufacturing Firms in the MENA Region," Review of Middle East Economics and Finance, De Gruyter, vol. 16(3), pages 1-28, December.
    55. Roth, Jonathan & Sant’Anna, Pedro H.C. & Bilinski, Alyssa & Poe, John, 2023. "What’s trending in difference-in-differences? A synthesis of the recent econometrics literature," Journal of Econometrics, Elsevier, vol. 235(2), pages 2218-2244.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Bhorat, Haroon & Köhler, Timothy, 2025. "The labour market effects of cash transfers to the unemployed: Evidence from South Africa," World Development, Elsevier, vol. 188(C).
    2. Mensah, Justice Tei, 2024. "Jobs! Electricity shortages and unemployment in Africa," Journal of Development Economics, Elsevier, vol. 167(C).
    3. Meles, Tensay Hadush & Mekonnen, Alemu & Jeuland, Marc & Beyene, Abebe D. & Klug, Thomas & Hassen, Sied & Sebsibie, Samuel & Pattanayak, Subhrendu K., 2025. "Does the payment vehicle matter for valuing improved electricity reliability? A discrete choice experiment in Ethiopia," Utilities Policy, Elsevier, vol. 93(C).
    4. Richard S. J. Tol, 2023. "Navigating the energy trilemma during geopolitical and environmental crises," Papers 2301.07671, arXiv.org.
    5. Dmitry Arkhangelsky & Guido Imbens, 2023. "Causal Models for Longitudinal and Panel Data: A Survey," Papers 2311.15458, arXiv.org, revised Jun 2024.
    6. Roth, Jonathan & Sant’Anna, Pedro H.C. & Bilinski, Alyssa & Poe, John, 2023. "What’s trending in difference-in-differences? A synthesis of the recent econometrics literature," Journal of Econometrics, Elsevier, vol. 235(2), pages 2218-2244.
    7. Kamila Cygan-Rehm, 2022. "Lifetime Consequences of Lost Instructional Time in the Classroom: Evidence from Shortened School Years," CESifo Working Paper Series 9892, CESifo.
    8. Asatryan, Zareh & Baskaran, Thushyanthan & Birkholz, Carlo & Gomtsyan, David, 2021. "Favoritism and firms: Micro evidence and macro implications," ZEW Discussion Papers 21-031, ZEW - Leibniz Centre for European Economic Research.
    9. Erten, Bilge & Leight, Jessica & Tregenna, Fiona, 2019. "Trade liberalization and local labor market adjustment in South Africa," Journal of International Economics, Elsevier, vol. 118(C), pages 448-467.
    10. 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).
    11. Meeks, Robyn C. & Omuraliev, Arstan & Isaev, Ruslan & Wang, Zhenxuan, 2023. "Impacts of electricity quality improvements: Experimental evidence on infrastructure investments," Journal of Environmental Economics and Management, Elsevier, vol. 120(C).
    12. Zhong, Shen & Zhou, Zhicheng & Gao, Wei, 2025. "Impact of regional finance reform and innovation policies on green innovation in pilot cities: A quasi-natural experiment," Economic Analysis and Policy, Elsevier, vol. 85(C), pages 888-911.
    13. Andrea Ciaccio, 2023. "The Impact of a Cost-containment Measure on the Quality of Regional Health Services in Italy: a Parametric and a Non-parametric Approach," Working Papers 2023: 24, Department of Economics, University of Venice "Ca' Foscari".
    14. Mensah,Justice Tei & Hirfrfot,Kibrom Tafere & Abay,Kibrom A., 2022. "Saving Lives through Technology : Mobile Phones and Infant Mortality," Policy Research Working Paper Series 9978, The World Bank.
    15. Niu, Geng & Jin, XiaoShu & Wang, Qi & Zhou, Yang, 2022. "Broadband infrastructure and digital financial inclusion in rural China," China Economic Review, Elsevier, vol. 76(C).
    16. Jianxian Wu, 2025. "Quantifying the Synergistic Effects of Sustainable Development Policies: A Quasi-natural Experiment Approach," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 177(3), pages 1113-1136, April.
    17. Callen, Ian & Stoddard, Christiana, 2024. "Putting the “A” in AP: The effect of advanced placement state policies on student participation and performance," Economics of Education Review, Elsevier, vol. 102(C).
    18. Elena Kotyrlo, 2024. "Simple and complex difference-in-differences approach," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 73, pages 119-142.
    19. Abiodun, Kehinde & Gilbert, Ben, 2022. "Does universal electrification shield firms from productivity loss?," World Development Perspectives, Elsevier, vol. 28(C).
    20. Wang, Lisha & Pan, Minjie & Qian, Xinlei & Lv, Kangjuan, 2025. "Do specialized courts matter? Environmental judiciary and corporate emissions in China," Energy Policy, Elsevier, vol. 199(C).

    More about this item

    Keywords

    Electricity; Labour market; Developing countries; South Africa;
    All these keywords.

    JEL classification:

    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:unu:wpaper:wp-2024-20. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Siméon Rapin (email available below). General contact details of provider: https://edirc.repec.org/data/widerfi.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.